Dhaka bourse's revenue mostly from FDR interest

Interests on fixed deposits generated more revenue for Dhaka Stock Exchange than the bourse's core business that includes share transactions and listing fees.

The DSE received Tk 117.7 crore in interest on fixed deposits in fiscal 2014-15, which accounted for about 61 percent of total revenue, according to the premier bourse's annual report that will be placed at the 54th annual general meeting on March 31 for shareholders' approval.

The bourse's total fixed deposits with 23 banks stood at Tk 1,078.5 crore at the end of June last year, with an annual interest rate ranging between 9.5 percent and 10.5 percent.

The DSE's total revenue was Tk 194.15 crore last fiscal year, the second year after its demutualisation; the bourse's operating income stood at Tk 141.55 crore.

Although the share transaction fee, howla charge and listing fee are the core business areas for a stock exchange, the DSE received only Tk 49.69 crore in transaction fees, Tk 5.28 crore from howla charges and Tk 11.86 crore from listing fees.

As transaction fees and howla charges are directly linked to share trade, the average daily turnover dropped below the Tk 450 crore mark from upwards of Tk 500 crore a year earlier.

The secondary market is yet to recover the losses incurred during the downswings of 2010-11. The DSEX, the benchmark index of the prime bourse, hovered around the 4,500-point level last fiscal year.

The DSE is taking several initiatives to increase revenue generation from the stock exchange's businesses, rather than depending on interest income.

Increasing trade volume is a major way to generate more revenue, but it is not under the control of the bourse and depends on stability and vibrancy in the secondary market, said Swapan Kumar Bala, managing director of the DSE.

“So, we are focusing on introducing new products and services, such as exchange traded funds, derivatives and data sales to increase revenue generation,” he said.

The DSE is also in talks with the central bank to create a vibrant bond market. “If we can make the government treasury bonds tradable, transaction fees and howla charges will increase significantly,” he added.

Meanwhile, the bourse's net profit rose 1 percent year-on-year to Tk 134.64 crore with Tk 0.75 in earnings per share, compared to Tk 133.95 crore and Tk 0.74 respectively a year ago.

The DSE has recommended 10 percent cash dividends for its shareholders for fiscal 2014-15. This will be the first dividend payout since demutualisation of the bourse, if the recommendation is approved at the AGM.

The DSE has become a profit-oriented company owned by shareholders after demutualisation in 2013. The demutualisation scheme was approved by Bangladesh Securities and Exchange Commission in 2013, and the law on the issue was passed in 2012, to bring transparency to the stockmarket.

Demutualisation is a way to separate the bourses' management from ownership. Prior to demutualisation, Bangladesh's stock exchanges were non-profit cooperatives, owned by the exchange members, who were usually stockbrokers.