DSE plans to diversify products
The country's stockmarket lacks diversified products, leaving investors with limited opportunities for exploration, said KAM Majedur Rahman, managing director of Dhaka Stock Exchange (DSE).
“The investors have limited scope to paint their portfolios with many colours,” he told The Daily Star in an interview on Sunday.
“We are dealing with equities only. So, we are going to introduce ETF, derivatives, ATB, and SME platform.”
An ETF or exchange-traded fund is a marketable security that tracks a stock index, a commodity, bonds or a basket of assets.
Rahman says the DSE is going to introduce the ETF for professional brokers and this can be attractive to foreign investors as well.
The exchange plans to launch an SME board soon so that the growth engine of the country's economy gets easy access to the financial system. It is also going to roll out an alternative trading board or ATB, a unique platform where non-listed companies can participate to attract investors.
“This board will open up an opportunity for venture capital and start-ups,” said Rahman.
Other plans of the DSE include putting in place a long-term infrastructure bond such as the ABS or asset-backed securities with the help of a Chinese consortium.
The Chinese consortium, comprising Shenzhen Stock Exchange and Shanghai Stock Exchange, became a strategic partner of the bourse in May last year. It has 12,000 investors who are looking for investment opportunities worldwide.
The consortium was chosen so that it can assist the DSE in developing the market, the exchange, and the investors, said Rahman.
“This partnership gives the bourse recognition in the global arena. Our association with the two major exchanges means that we have a lot of potential and it will boost investors' confidence in the market.”
The bourse is going to set up a platform so that Bangladeshi companies can be accessed by Chinese companies and Bangladeshi companies can look for technical cooperation or financial investments from Chinese firms.
“All of these will not happen overnight; it's a gradual process,” said Rahman.
Rahman, who previously held a variety of senior management roles at home and abroad at ANZ Grindlays Bank, Standard Chartered, Mashreq Bank, Dhaka Bank, AB Bank and Premier Bank, says the premier bourse is a fintech (financial technology) but operates largely manually.
“Our transaction process is slow and investors' response time is pretty cumbersome. We need to make good use of technology.”
“We want a smart platform where issuers, investors and regulators can interact real-time.”
Rahman said the DSE is looking for massive development in its trading platform, surveillance system and internal management. It is introducing a technology, with the help of the Chinese consortium, so that issuer-companies can submit their reports online.
“We are going to improve the technology of the trading platform of the exchange to help the broker community, investors and regulators.”
Rahman said multinational companies operating in Bangladesh are still running branch-like operations of their parent companies. But they are not allowed to operate like a branch even in India.
Branch-based operations might be approved for small companies but large companies need local incorporation, he said.
“The country needs to put in place a rule for local incorporation of multinational companies. If we can introduce it, the stockmarket will get a good response from multinationals and the market will be benefitted.”
In recent times, the stockmarket has witnessed an upward movement and the DSE chief thinks that the market will thrive further riding on the steady economic growth and stable political scenario.
“Now, we need good scrips and knowledge-based investors. These two things are very important. If it can be assured, the market will continue to grow.”
Rahman says some vested interest groups always exist in all markets who try to manipulate them to gain undue benefits.
“We have to expand our market. If the market expands, the manipulators may not be successful,” he said, calling for implementation of laws and good governance practice.
He also touched upon the bond market, saying the market needs a favourable transaction and regulatory platform.
“We have our transaction platform ready, but there is a roadblock when it comes to taxation.”
“I hope the new finance minister will take initiatives to make the bond market vibrant and the National Board of Revenue will respond to our demand so that we can resolve the issue during the budget session this year,” said Rahman.
There is no advance income tax on the transaction of bonds outside the stockmarket and Rahman said the DSE wants the same benefit on the trading board.
