What investors expect from new BSEC chair

Bangladesh's stock market has been bearish for the past 14 years, leading to significant losses for many investors, erosion of their confidence and weakening of numerous associated institutions, such as the Investment Corporation of Bangladesh (ICB).

The number of beneficiary owner (BO) accounts has declined from a peak of 3.3 million to 1.6 million, of which about 1 million actively participate in the secondary market.

The lack of good governance was evident from the questionable steps taken by the last two chairmen of the Bangladesh Securities and Exchange Commission (BSEC).

These include approvals for low-quality initial public offerings (IPOs), which were overvalued in many cases and which flooded the market with substandard stocks.

The floor price was imposed for a long period while the market was dominated by a few manipulators who created artificial demand and conducted insider and serial trading.

The recent appointment of Khondoker Rashed Maqsood, who has extensive experience in the banking sector, as the BSEC chairman has renewed hope for the restoration of investors' confidence.

Investors and analysts expect him to prioritise a number of issues.

Focus on regulatory integrity

The BSEC's primary role should be to formulate and implement effective policies rather than focusing on market returns and the rise of the index.

The regulator must amend regulations related to IPO approvals, market surveillance and investor protection to ensure that the market operates with transparency, fairness and adherence to global best practices.

Abolish floor price

The regulator has to fast lift the floor price currently in place for six stocks, standardise the circuit breaker threshold from the existing 3 percent and make an announcement assuring that such measures would not be reimposed.

These will make it clear to foreign and domestic investors that the market is prioritising liquidity and adhering to basic secondary market principles.

The floor price has not only failed to stabilise the market but also driven away the very investors needed for market recovery.

Crackdown on market manipulators

The regulator must take decisive action as per securities laws, such as the imposition of fines of substantial amounts, against manipulation, which includes publishing of false reports, artificial demand creation and insider and serial trading.

By holding manipulators accountable, the BSEC can begin to rebuild trust among investors and create a level playing field.

Policy support for stockbrokers

The bearish trend, low turnovers, reduced trading activity and shrinking client base have left stockbrokers struggling to reach even break-even.

The BSEC could facilitate quick and easy loans from Capital Market Stabiliser Fund and the ICB for secondary market investments would offer much-needed relief.

It could also advocate for the withdrawal of a capital gains tax imposed by the National Board of Revenue last fiscal year.

These measures would help brokers sustain their operations and support market liquidity, ultimately contributing to the survival and recovery of the industry.

Views are personal. The author is the head of operations and compliance at UniCap Securities. He can be reached at shahriar@unicap-securities.com