Central Counterparty gets 11 directors, holds first meeting Thursday

Highlights: 

• In 2012, CSE submitted a proposal for forming CCBL 
• In 2013, both stock exchanges signed an agreement for CCBL
• In 2016, BSEC (Clearing and Settlement) Rules were finalised
• The company was incorporated in May 2018
• It will be managed by 11 directors along with chairman and managing director 
• CCBL will settle trading of equities, which will reduce settlement risk and time
• Currently, the settlements are done through the CDBL 
• Stock exchanges will only operate a trading platform to bring together buyers and sellers

The Bangladesh Securities and Exchange Commission (BSEC) has recently approved the eleven directors of the newly introduced Central Counterparty Bangladesh Ltd (CCBL), which will settle the trading of equities with a reduced risk and time. 

The company will also ensure trading anonymity and make the settlement operations more efficient. It will remove the settlement problems and complexities of stock exchanges. 

Currently, the settlements are done through the Central Depository Bangladesh Ltd (CDBL). 

Of the CCBL directors, seven are independent directors and four are shareholder directors. 

Md Rakibur Rahman has been appointed as a shareholder director on behalf of the Dhaka Stock Exchange, Asif Ibrahim from the Chittagong Stock Exchange, AKM Nurul Fazal Bulbul from the CDBL, and Anis A Khan, managing director of Mutual Trust Bank, on behalf of banks.

On January 22 this year, the BSEC appointed seven independent directors of the newly introduced company.

Habibus Samad, ex-managing director of CDBL; Abdus Salam Sikder, BSEC commissioner; Tajdiqul Islam, finance director of Sanofi-Aventis Bangladesh; Professor Asif Hossain Khan of the University of Dhaka; Mohammad Tareq, associate professor of the University of Dhaka; Professor Jamal Uddin of the University of Chattogram; and Mostafizur Rahman, ex-director of Bangladesh Association of Software and Information Services, have been appointed independent directors.

The first board meeting of the CCBL will be held on Thursday, when one of the directors will be elected as chairman of the company.

The board will then appoint a managing director to manage the operations. The entire scenario of the company from its debut will be presented in the board meeting.

Md Rakibur Rahman told The Business Standard, "CCBL's first board meeting will be held on Thursday, and we will set the action plan of the company in the meeting."

"Our goal will be to build a robust platform using modern technology. The stock market will benefit from the platform. We want the company to move forward regarding the clearing and settlement of shares," he added. 

Sources said that there will be no need to close transactions on the day after the record date, once the CCBL is established.

The company will mediate each transaction, and will guarantee the payment of all debts. The clearing and settlement of each share transaction will be uninterrupted and assured.

The company will control the activities of beneficiary account opening, maintaining and managing of the investors.

Besides, it will transfer from investors' shares and money properly. It will ensure the control, security and confidentiality of clearing and settlement procedures.

However, transaction costs may increase. 

The stock exchanges will only operate a trading platform to bring together buyers and sellers.

According to the new rules, 65 percent ownership of the company has been given to the stock exchanges – 45 percent ownership to DSE and 20 percent to CSE. 

The remaining 35 percent will be owned by CDBL, various banks and strategic investors.

The authorised capital of the clearing and settlement company will be Tk500 crore and the paid-up capital is Tk300 crore. 

In June 2012, the CSE submitted the first proposal to the regulatory body to form a separate company for clearing and settlement. Later, DSE also submitted the same offer. 

On August 21, 2013, both stock exchanges signed a memorandum of understanding to form a separate joint venture company for clearing and settlement.