Bonds, derivatives, online trading set for DSE
Massive expansion could mean millions for local firms
The DSE announced bold expansion plans on Tuesday that could greatly increase its products and scope, and attract billions into Bangladesh’s cash-starved companies.
In a ground-breaking announcement, the newly-elected The Dhaka Stock Exchange (DSE) president committed that online trading, bond trading, a derivatives market and equity trading will be introduced by September. The DSE will be in line with international standards, said Shakil Rizvi on Tueaday, setting a three-year timeframe.
The president said an expanded DSE would greatly enhance the prestige and capital of the exchange, adding that he expects stocks to remain high for the foreseeable future.
The president added that he was pleased with the finance minister’s assurance that shares of state owned companies would be floated soon, which investors hope will end the market dominance of market leaders like GP.
The announcement elicited rare praise from market observers, who have been critical of recent regulatory moves. Professor Mojib Uddin Ahmed said: “Definitely introducing the derivative markets is positive.” But he cautioned that market regulators need to catch up with the DSE’s expanding size and scope.
“The markets require a strong structure in terms of physical facilities, regulations and trading facilities. Those structural changes are essential before introducing such sensitive securities.”
The DSE said that the country’s crumbling power sector could attract funds through the exchange, saying that the DSE is ready to provide TK 20 billion in capital.
Professor Mojib Uddin Ahmed told The Independent that that the president’s projections sound reasonable.
“I personally believe that over 60 per cent of the development plans of the government can be easily funded by the capital market.”
Former DSE President Rokibur Rahman also agreed, saying the state collected over Tk 20 billion against Tk 3.5 million.
He was skeptical about the bourse’s bold expansion, saying that Dhaka is not ready to become a mature market. Renowned economist Abu Ahmed also applauded the announcement that internet trading would be introduced.
He cautioned that the derivatives market will need time to mature, and added that bank interest rates will need to drop if the bond market is to thrive.
The market’s volume has increased greatly over the past year, with turnover exceeding TK 17 billion, mover then 300 per cent over the previous year. The index went up by more than thousand points.
B/O accounts stood at 220,000, 12 thousands of which was only 140,000 in 2009. Market capitalization to GDP stood 38.38 per cent, which was 18 only per cent.
The number of electronic, versus demit or paper shares stands at 99.13 per cent.