Capital market ‘cold war’ unfolds

The much-discussed division between capital market's primary regulator – Dhaka Stock Exchange (DSE) and the super regulator Bangladesh Securities and Exchange Commission (BSEC) is more apparent now.

The BSEC, in last week, has issued a show-cause notice to the board of directors, managing director and the chief regulatory officer of the premier bourse over their role in many issues including investigating a listed company's performance, talking to the media in a way that might impact market prices.

The commission's investigation into the downturn found some deviations at the exchange's end. The BSEC has issued show-cause cum hearing notice to the people responsible there, confirmed Md Saifur Rahman, an executive director and the spokesperson of the securities regulator.

The DSE officials and directors were requested to be at the regulator's office on February 9 to attend a hearing.

Meanwhile, the DSE, in its board meeting on Tuesday, have discussed their preparation to attend the hearing. 

Investigating the investigations

Requested by the DSE Brokers association (DBA), the exchange had formed a committee to look into accounts of the ACI Limited as the company has been floating on debts and making losses despite impressive sales growth.

The committee members, few weeks later, appeared before media with comments that the company's submission and explanation were not satisfactory to them, and hence the issue will be sent to the BSEC.

The investigation committee and the comments had a negative impact on ACI share price, which was 33 percent down in six months, claims the BSEC investigation report. BSEC also said, in show-cause notice, that the exchange neither had jurisdiction to conduct the investigation without regulator's prior approval, nor talking such price sensitive issues in public.

The stock market in 2019 had been in a stiff fall, and to look into that the BSEC had formed an investigation committee in July, who submitted their report few months later.

The commission now unfolding the findings within an over 120-page report gradually.

It is only hurting the market and investors

The silent tussle between the DSE and the BSEC has its legacy of last couple of years.

Disagreements began with the DSE's attempt to inspect a non-performing company's site few years ago, followed by a show-cause notice from the commission.

The bitter relationship intensified during selection of strategic partner for the exchange. And in recent quarters, there has been almost confrontation over approving some newly public companies to list with the exchanges.

There had been examples where the board of directors at the DSE decided to reappoint its managing director citing his satisfactory performance, but later disapproved by the BSEC.

Later, recently the regulator approved the next proposed managing director, but three-fourths of the broker directors of the exchange are against appointing him.

It is a cold war between the DSE board and the BSEC, no one cares about the consequences in terms of market impact, let alone the developments of the market, said a senior member of the exchange, seeking anonymity.

Saleh Uz Zaman, a stock investor, expressed his frustration over the role of both the exchange and the regulator while talking to The Business Standard.

"The stock market has been sinking. Since the beginning of 2019, we barely saw the two working together to help the market," said the small investor.

DSEX, the broad-based benchmark of the DSE fell 0.3 percent to close at 4,465, which was near 6,000 a year ago.