Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor Shibli Rubayat-Ul-Islam has apprised Prime Minister Sheikh Hasina of issues that are affecting the development of the country's capital market.
"We have pointed out the issues that are hindering the capital market's spontaneous moves," he told The Business Standard after an exclusive meeting with the premier on Wednesday.
"The government will be supporting the growth of the country's capital market."
Before the meeting, BSEC Commissioner Dr Shaikh Shamsuddin Ahmed sat with the Bangladesh Bank senior officials to reiterate BSEC's stand on excluding bonds from banks' capital market exposure.
He also urged for adopting a cost-basis method for calculating the same, which would allow banks to hold into or add to their capital market investments.
Because of the market price basis of exposure calculation, banks are forced to offload from their stock holdings as soon as price gains in the market and that creates a selling pressure at the bourses.
When the exposure is calculated based on cost price – the price a bank paid for a stock, exposure is not impacted by changes in the market price.
Dr Ahmed told a press briefing on Tuesday, the central bank positively responded to each of the proposals and he hoped that the expected changes would take place gradually.
The BSEC had been in a series of discussions with the central bank also urging for moves to adopt the BSEC's Corporate Governance Code to allow listed banks to form nomination and remuneration committees and have at least 20% independent directors in their boards.
It also requested the Bangladesh Bank to allow banks to pay dividends following the International Financial Reporting Standard, and also to transfer the unclaimed dividends to the Capital Market Stabilisation Fund.
The BSEC further requested the central bank to partner with the capital market regulator before it acts in the capital market area.
Some recent moves by the Bangladesh Bank, such as directly asking for asset management companies' detailed data, asking for daily reporting on banks' capital market activities have created a panic among investors that had triggered a market fall.
Following Professor Islam's joining as the BSEC chairman, DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), began its recovery in the mid-2020 from a multi-year low.
The index, after more than doubling in 15 months, began to suffer a selling pressure in October and it went below 6,700 mark on Tuesday, from 7,400 on 10 October.
However, the BSEC's meeting with the Bangladesh Bank and the prime minister helped recover investors' confidence and the DSEX jumped 2.1% on Wednesday to close at 6,847.