SEC to formulate guideline on financial research, advisory services

Express (July 27, 2011)

The securities regulator has taken a number of decisions, including formulation of a guideline to introduce financial research and advisory services, to boost the country's stock market, officials said.

The decisions came Tuesday at a commission meeting, chaired by Securities and Exchange Commission (SEC) Chairman Professor M Khairul Hossain, held at the SEC office.

The other decisions taken by SEC's policy makers include, the formation of two separate committees to furnish the fixed price method of initial public offering (IPO) and avoid the punching errors, which occur during the execution of shares' buy-sell.

Mohammad Saifur Rahman, executive director of SEC, said as per regulatory decision, a three-member committee will formulate a guideline on research and advisory services for listed securities.

The move has been taken to develop the professionalisms in such services. After the formulation of guideline, the eligible financial researchers and advisors will be able to work in the stock market as per the guideline.

At the meeting, the regulator has reached to another unanimous decision to form a 5-member committee to fix up the terms of reference (ToR) for developing the fixed price method in the companies' IPO.

This move has been taken to avoid the controversy of price fixing of the companies, which will go public under fixed price method.

Mr. Rahman said the committee will fix up the ToR based on prior discussion.

However, the committee members are the president of Institute of Chartered Accountants of Bangladesh (ICAB), the president of Institute of Cost and Management Accountant Bangladesh (ICMAB), chief executive officers of both the stock exchanges and the chairman of finance or accounting department of Dhaka University.

To revise the book building method, the SEC has also decided at the meeting to serve the draft of a guideline, prepared on the matter, to different stakeholders.

After having stakeholders' opinion the regulator will seek public opinion before publishing the gazette notification on the final method.

The regulator will form another committee to address the punching errors by authorised representatives in different brokerage houses.

The committee will formulate guideline based on examinations so that such errors can be avoided in conducting sell-buy of shares during trading hours.

However, the SEC has fined a number of merchant banks and financial institutions for non-compliance of securities laws, including the violation margin rules.

At the same meeting, the regulator has approved the rights offer of United Airways. The company will offer one right share against one existing share of ten taka at an issue price of Tk 15, including a premium of Tk 5.

By issuing a total of 210 million shares, the company will raise a fund amounting to Tk 3.15 billion.