DSE must be efficient to avail benefit from strategic partner

The Dhaka Stock Exchange (DSE) has not yet been able to reap any technological benefit from its strategic partner even two years into its joining the bourse because of technological deficit, experts said.

The premier bourse will have to wait for this support until 2023 – when it will launch new software with the licences of existing ones being expired. The DSE must achieve technological efficiency by this time, they observed while addressing a virtual discussion on Thursday.

The Lawyers & Jurists and The Business Standard jointly organised the dialogue titled "Reformation of BSEC, Implementation of Laws and Investors' Confidence". Mahamud Hosain, managing partner of MMH & Co, hosted the event.

In September 2018, the Chinese consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange joined the DSE as its strategic shareholder by purchasing 25% shares for Tk947 crore.

The consortium offered technical assistance worth over $37 million to the DSE in training and consulting services. The DSE members got Tk947 crore by selling 45.09 crore shares at Tk21 each.

Md Shakil Rizvi, director of the DSE, said the Chinese consortium is always ready to provide technological support but the DSE is not prepared to receive it.

The DSE is now using OMS software of FlexTrade Systems and the trade matching engine of Nasdaq in its existing trading platform. The contracts with the two companies will end in 2023, he added.

The Chinese consortium is only committed to providing technological support, not for individuals' buying shares. But they will help the bourse to make a connection with big investors once it becomes technologically sound, Shakil Rizvi added.

"Now, we cannot connect Chinese investors with local ones owing to technological shortcomings. They are unaware of the DSE's trading situation. The technological upgrade will give foreign investors access to the bourse," he said.

Professor Shibli Rubayat Ul Islam, chairman of the Bangladesh Securities and Exchange Commission (BSEC), said the commission has already inspected the DSE platform and found technical flaws. The exchange is now working to resolve these issues within a few months.

"We are now working to empower the Investment Corporation of Bangladesh (ICB) so that it can contribute to the market. It will be possible to complete the process by December this year," he added.

The BSEC chairman said they have made a concrete decision about 2% and 30% shareholding rules. Two-thirds of shareholders have already complied with the rules regarding the 30% joint shareholding. They will take actions against those who fail to do so.

"We are also working on how to directly add bank accounts of investors with its BO accounts," he added.

Stock market expert Professor Abu Ahmed said blue chip companies have to get listed for a sustainable capital market.

Stakeholders have to take initiatives to enlist multinational and government firms in the capital market, he added.

Barrister AM Masum, head of Chamber of the Lawyers & Jurists, said eligible investors play an important role regarding cut-off prices in book building systems.

But it is alleged that some eligible investors manipulate the cut-off prices of the companies.

He suggested adding more clauses in book building laws to prevent manipulations.