- Digital system expected to reduce irregularities
- Central monitoring to ensure integrity
- Investors' money to remain safe
- Brokerage firms to be unable to misuse funds
- Investors' suffering to decrease
Investors' money lying with brokerage firms is coming under a proper monitoring system in a move to prevent irregularities involving the funds.
Usually, every brokerage house has a consolidated account with a scheduled bank to deposit the receivable and payable money of its clients.
The respective brokerage houses maintain such accounts with nominal supervision – which allows for irregularities such as misuse of funds.
To prevent these anomalies, the Bangladesh Securities and Exchange Commission (BSEC) is now bringing the consolidated accounts under a digitalised platform.
The commission also wants to make a centralised consolidated account for better integrity of the investors' funds.
The BSEC will take the initiative very soon, according to commission officials.
As per the rules, every stockbroker must maintain a consolidated account in its name, with a scheduled bank, for depositing money received from its customers and paying money to them.
Additionally, all money received from customers must be deposited in that account on the day of receipt.
But sometimes, many brokerage firms create irregularities in the consolidated accounts.
Many of the firms illegally provide cash or loans to their directors from the consolidated accounts.
Some others use the funds to apply for primary shares.
Thus, investors lose everything when brokerage firms drain money from the consolidated accounts illegally.
Last year the incident of Crest Securities Ltd, a member of the Dhaka Stock Exchange, was a burning example in this regard.
BSEC Commissioner Dr Shaikh Shamsuddin Ahmed said the majority of the brokerage firms do not abide by the rules properly while handling consolidated accounts.
"They manage the accounts in their own ways," he added.
"We plan to update the system to bring integrity so that investors' money remains safe. But we have yet to finalise an action plan. Once it is updated, investors' money will be safer, irregularities will decrease and it will be easier for monitoring."
Professor Abu Ahmed, a capital market analyst, said, "It is similar to defrauding investors because investors are the owners of the funds in consolidated accounts, not stockbrokers."
However, investors do not have any way to find out about such fraud, he added.
He said the regulator should maintain software centrally to observe the transactions of consolidated accounts, so that it can be possible to find out instantly whenever a firm has a deficit.
Consolidated accounts are not necessary for investors if it is possible to keep funds in their own accounts during transactions, he added.