Body to select demutualisation model Tuesday

Dhaka bourse authorities and a committee on demutualisation will sit on Tuesday to select a model of the much-talked-about demutualisation. The issue of demutualisation of stock exchanges was also a major recommendation in the stockmarket probe report submitted to the government on Thursday.
“We will sit for the third time with some proposals on the demutualisation of the stock exchanges,” said Md Fayekuzzaman, head of the committee.
“Steps towards the demutualisation process will be discussed in the meeting. We have some models in hand, based-on international practices. So, we will discuss those models and try to select one, and set a timeframe to complete the process,” said Fayekuzzaman, also managing director of Investment Corporation of Bangladesh.
Demutualisation of a stock exchange transforms it from an entity owned by mostly brokerage-owning members into a for-profit company owned by shareholders. It ensures a sound corporate governance, alternative business models and operational efficiency.
A demutualised exchange can also freely trade on the market like any other public company.
Bangladesh's stock exchanges are now non-profit cooperative organisations, owned by the exchange members who are usually stockbrokers.
“We want demutualisation of our stock exchanges after selecting an international stockmarket as a model and considering the perspective of Bangladesh market,” said Shakil Rizvi, president of the Dhaka bourse.
“The DSE is already a semi-demutialised bourse; now we are looking for a complete demutualisation,” he said.
The probe report on the recent stockmarket scam that was submitted to the finance minister on Thursday said: "Conflict of interests occurs if businessmen take the role of regulators and impasse surfaces while executing regulatory duties."
The probe committee, headed by Bangladesh Krishi Bank Chairman Khondkar Ibrahim Khaled, also put forward 30 more suggestions to make the stockmarket and its regulator more transparent and accountable.
Khaled said, "It is necessary to demitualise the stock exchanges. Market players and regulators should be separated."
He also said India has already done demutualisation, and so the Bangladeshi stocks should also be demutualised as soon as possible.
Ahasanul Islam, senior-vice president of DSE, said: "After choosing an international model, we will start the demutualisation process.”
Market analysts said several times that the member-based exchanges are currently managed by the board of elected and non-elected directors. As a result, the bourses have a lack of proper corporate management and the chief executive officers often get influenced by leading members, they said.
The DSE in February formed the 10-member demutualisation committee following immense pressure from the government.
Previously, Finance Minister AMA Muhith had said there is no alternative to demutualisation and it must be completed within this government's tenure.