DBA’s demand to update demutualization law

DSE Brokers Association of Bangladesh (DBA) has demanded to update the law of separation of ownership and management (demutualization) of stock exchanges. The organization made this demand after allegations of share manipulation were raised against an individual director of the Dhaka Stock Exchange (DSE).

According to DBA, there has been no fundamental change in the last 10 years after demutualization. The stock exchange has not improved in the last 10 years. So now is the time to update the demutualization law.

The DBA president said these things in response to questions from reporters at a press conference on Tuesday (June 11) about the proposed budget for the fiscal year 2024-25.

In 2013, the development of stock exchange separated management from ownership (demutualization). This act is made by giving dominance and majority of individual directors. Even now the chairman of the board of the stock exchange has to be taken from an independent director.

Apart from this, 7 people are independent in 13 seats of the board of directors. But their role is still less than that of shareholder managers. Meanwhile, an individual director was recently accused of share trading.

In view of this, the journalists asked why action has not been taken regarding the share manipulation and why the DBA has not raised questions about it? In response to this, the DBA president said, “We also came to know about the matter with the help of the media.” Hope DSE Board will play an effective role in this regard. Individual directors cannot trade shares.

Saiful Islam also commented that the decision to have four shareholder directors in the board of directors is not coming in their favor. He said, after demutualization, there has been any improvement in the stock exchange in the last 10 years? If not the Demutualization Act should be reviewed. We think it is time to review the Demutualization Act. DSEC should be given more powers to appoint directors.

In response to another question, he said that good companies are not coming to the stock market due to lack of good governance, transparency and accountability. The main problem of stock market is lack of good companies. In the last 15 years except 1-2 good companies have not come in the market. New investors are also not being attracted as good companies are not listed. New investors will not come unless good companies enter the market.

He said, since 2010 we are going through problems. Could not stabilize the market in 14 years. A generation market is turning away. There is no logical reason for the rate at which the market is falling. The market is becoming unstable. Retaining investors is becoming difficult. In the last few years, the BO account of investors has come down from 33 lakhs to 17 lakhs.

To attract investors, he demanded that undisclosed income (black money) investment opportunities in the stock market and new investors be declared tax-free for three years. At the same time, the DBA president also demanded not to impose capital gain tax on the stock market.