Demutualisation gathers pace as SEC forms panel
The Securities and Exchange Commission has formed a three-member panel to look into the demutualisation of stock exchanges.
The stockmarket regulator asked the committee headed by SEC Executive Director Farhad Ahmed to examine whether the broad principles are being followed by the two bourses in their preparations for demutualisation, and report by August 2.
Another report the SEC wants from the panel, on August 14, is a review of the draft law handed in by the Dhaka bourse to the finance ministry and the stockmarket regulator.
Demutualisation is simply a process which would transform the stock exchange from an entity owned by stockbrokers to a public company owned by shareholders
The process is conducive to sound corporate governance and operational efficiency.
Bangladesh's stock exchanges are now non-profit co-operative organisations, owned by exchange members who are predominantly stockbrokers.
After the stock market crash at the beginning of last year, market experts were advocating demutualisation of the stock exchanges for greater transparency and accountability.
Even the probe report on the stock-market crash submitted to the government on April 7 last year highly recommended the operation.
Conflict of interest occurs if businessmen take the role of regulators, which, more often than not, results in shirking of regulatory duties, the probe report found.
“It is necessary to demutualise the stock exchanges. Market players and regulators should be separated,” it said.
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