DSE, CSE to set up clearing company

Dhaka and Chittagong bourses yesterday signed a deal to set up a clearing company jointly for smooth settlement of share and cash transactions from one place.
The clearing company, two third of which will be owned by the premier bourse and the rest one third by the port city bourse, would also help the bourses to do trading settlement on the day of trading, which now takes three days.
Presently, the share transactions are settled through the Central Depository of Bangladesh, which operates the central depository system for electronic share transaction.
On the other hand, the cash transactions are settled through the banking channel.
Capital market related diversified products such as derivatives, futures and options, can also be introduced in the capital market once the clearing company will be in place.
Swapan Kumar Bala, chief executive officer of Dhaka Stock Exchange, and Syed Sajid Hossain, chief executive officer of Chittagong Stock Exchange, inked the deal.
DSE President Ahasanul Islam Titu and CSE President Al Maruf Khan were also present.
The twin bourses will now apply to the Bangladesh Securities and Exchange Commission for registration of the clearing company.
“It will be cost-effective and benefitting for stockbrokers, dealers and investors. Trading efficiency and management efficiency will also be increased once with the launch of the clearing company,” said Khan.
“It is also necessary as our stock exchanges are going to be demutualised within this year,” he said, adding that such clearing companies are there in neighbouring India and Pakistan.
The Asian Development Bank as part of its Bangladesh capital market development programme has been advising the government and the stockmarket regulator for the last five years for setting up a separate clearing corporation.