DSE to launch a fresh index by next month

A fresh index will be introduced on the Dhaka Stock Exchange (DSE) next month to replace the existing indices, which contain inflated points due to previous faulty computations.
“Standard and Poor's was appointed a few months ago to design a new index for us,” said DSE President Rakibur Rahman yesterday.
“The S&P is working to set up the new index, and we hope it will be launched by December,” he said.
Rahman spoke at a press briefing after the DSE meeting with the Securities and Exchange Commission regarding the set of reforms the premier bourse recommended.
A new index was supposed to replace the existing ones early this year, but it was delayed due to a host of reasons that include failure to submit information on free-float shares by some listed firms.
The need for a fresh index first came to the spotlight in October 2010 through media reports.
Later, the SEC itself found that the Dhaka bourse did not follow the correct method of index calculation while incorporating new securities.
Although the DSE has made some corrections in its methodology, some of the errors still remain.
Previously, the DSE took into account all companies' shares in computing the impact of price movement -- up or down -- on the index.
Now, it does so by considering just the free float/tradable shares of listed companies.
Presently, the prime bourse has three types of indices.
Rahman also said the premier bourse will launch a Bangla version of its website by February 21 of next year.
The DSE had submitted a set of proposals to the stockmarket regulator last month, in an effort to bring stability to the volatile market.
The proposals include introduction of a new category, imposing condition on share sale by sponsors and directors, modification in listing regulations, right and public issue rules, introduction of guideline on asset revaluation and strengthening investors' protection fund.
The DSE also urged the SEC to scrutinise the track records of the people behind a company prior to giving the initial public offering approval, as company's performance hinges on the firm's key persons.