CMSF emerges big to support the market

Most of the undisbursed cash dividends in the listed firms have already been deposited to the Capital Market Stabilization Fund (CMSF), while the scenario is quite the opposite for undisbursed shares.

According to the Thursday report by the CMSF – a special entity the securities regulator formed in August last year to utilise investors' unclaimed assets within listed companies – Tk460 crore cash and shares worth Tk338 crore have been handed over to them, against the expected cash of Tk609 crore and shares worth over Tk8,100 crore.

Over 60% of the eligible companies have transferred their undisbursed cash dividends and non-refunded public subscription, whereas only 35% of firms transferred their unclaimed stock dividends or unallocated right shares.

With the received total assets worth Tk798 crore, CMSF has already emerged as a market support entity and the remainder of the investors' wealth in the pipeline is set to make it big enough.

The Bangladesh Securities and Exchange Commission (BSEC) is planning to follow a hardline against the issuers who fail to hand over all the unclaimed investors' wealth by the 31 May deadline.

Citing many practical problems, a large number of firms sought several weeks from the regulator.

However, it is clear that the CMSF, being governed by a board composed of experts from a wide range of fields, is going to emerge as a big entity by the end of this year.

What CMSF is for

The major role of the CMSF is to work as a custodian of the investors' unclaimed wealth as it pays back the unclaimed cash or shares upon claims by the actual owners who somehow were not claiming their money or shares from the companies concerned, said Md Monowar Hossain, the chief of operations (COO).

Hossain presented a keynote paper on CMSF at a recent tripartite dialogue among the fund, the regulator and the listed companies titled "Strengthening the Capital Market through Partnership," where top BSEC, CMSF officials and the leaders of Listed firms, bourses and intermediary industries spoke.

Keeping market stabilisation in mind, CMSF is handling the public money in a manner that the fund does not face capital erosion and can create an exponential effect supporting the market, the COO told The Business Standard.

CMSF has already made an interest-bearing loan of Tk200 crore to the state-owned Investment Corporation of Bangladesh (ICB) and the de-facto market maker is operating the fund from a separate investment account to buy falling undervalued stocks.

CMSF as the sponsor is making a subscription of Tk50 crore to the Golden Jubilee Fund.

The rest of the over Tk100 crore cash is kept in a bank as a deposit and the fund.

This is the beginning, the CMSF is equipping itself for market support for the rest of its perpetual life.

CMSF can hold cash, invest in securities and also fund market intermediaries, according to the rules.

The shares being held in the CMSF account are yet to be used in market support activities, but it is very possible on the advice of the regulator, said Hossain.

CMSF might use the shares as a subscription to new mutual funds as their sponsor, the shares might be traded for market stabilisation and even the CMSF might borrow against the asset, upon the regulator's advice and its board's approval.

In future, the CMSF might receive and use any fund by the state if given for market stabilisation during market volatility, he added.

CMSF has already settled 93% of the claims made by investors and the remaining claims are set to be settled within a few weeks, said its COO.