Express (August 09, 2011)
The securities regulator Monday asked the merchant banks to concentrate on discretionary portfolio management to stabilise the stock market by ensuring smooth handling of their clients' funds and reducing investment risks, officials said.
The instruction came from a meeting held at the Securities and Exchange Commission (SEC) to review the overall situation of the market, following the plunge of stock prices for the last few days and subsequent demonstrations by aggrieved investors.
At the meeting, the securities regulator reached a decision to form a committee to identify the existing problems of the market and oversee the execution of decisions regarding their solution.
"The regulator instructed the merchant banks to apply discretionary portfolio management to stabilise the market," SEC executive director (ED) Mohammad Saifur Rahman told the reporters.
Mr Rahman said the regulator is working to bring stability to the market, and Monday's meeting was held as a part of its continuous efforts.
"At the meeting the SEC has sought opinions of the merchant banks on ways to bring back normalcy in the stock market."
"Both the regulator and the bankers have reached a unanimous decision to form a committee to identify the problems of the market and help the regulator solve those problems," Mr Rahman said.
However, the names of the persons who might be included in the committee have not been decided yet.
According to the SEC ED, the regulator also assured the banks that they would get time up to December 31, 2011, to adjust their single borrower's exposure limit.
He said it is nothing but a rumour that the merchant banks will have to adjust the exposure limit by September 30, 2011.
"After talking with the Bangladesh Bank, the SEC has confirmed the December 31 deadline," Mr Rahman added.
At the meeting, the merchant bankers urged the regulator to open a research and advisory wing to assist the banks and the non-banking financial institutions (NBFIs).
However, the SEC told the bankers that it would soon set the criteria of corporate advisory services, according to which the merchant banks can employ financial researchers and advisers for ensuring safe investment.
The bankers also emphasised on expediting the share-offloading process of the state-owned enterprises (SOEs) for the sake of sustainable development of the market.
After the meeting, Dr Waliur Rahman, chief executive officer of Sonali Investment Ltd, said lack of awareness among general investors was one of the reasons behind the recent panicky situation in stock market.
"The situation can be improved through conducting more awareness-building programmes."
The merchant banks made an all-out effort to continue their investment in the market despite its gloomy outlook, he added.
Meanwhile, the representatives of Bangladesh Share Market Investors Oikya Parishad called on the SEC Chairman Professor M Khairul Hossain at his office, and handed over a 15-point charter of demands to restore the market's stability.
Their demands included bringing the omnibus accounts under discipline, taking measures for ploughing back of funds of the vested quarters who made hefty profits through market manipulation, introducing law on investment security, and establishing a national stock exchange.
The SEC chairman assured the investors of meeting their logical demands.
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