1
Role of capital market in Bangladesh
+
Faculty of Business Studies
Term Paper Report On
“Role of Capital Market In Bangladesh”
Submitted to,
Ms.Fatema Afreen
Lecturer
Department Of Finance
Faculty of Business Administration
Premier University
Submitted By,
Amir Faisal
ID-1021114049
Finance-B
21st Batch
Session: April2010
Premier University
Date of Submission:
Premier University
Chittagong City Corporation

2
Role of Capital market in Bangladesh

3
Letter of Transmittal
Ms.Fatema Afreen
Supervisor of the term paper
Department Of Finance
Faculty of Business studies
Premier University Chittagong
Subject: Submission of Term Paper Report.
Dear Madam,
I am very glad to submit a Term Paper Report titled as “Role of Capital Market in Bangladesh”
The qualitative report is submitted as a partial fulfillment as a part of BBA course. the
preparation of the report has give me insightful experience and in-depth knowledge about the
role of Capital market in Bangladesh
I have tried my best to gain practical experience in Capital Market in Chittagong stock exchange
and also tried to reflect the same in report with my limited scope and knowledge. I have gathered
about realistic awareness throughout this report preparation. I hope that I have been able to fulfill
our academic necessities.
I wish your hearty consideration, if there is any deviation in my report and also thank you for
your friendly cooperation.
Yours sincerely
__________
Amir Faisal
ID-1021114049
Finance-B
21st Batch
Session: April2010
Premier University

4
Acknowledgement
It really was a great challenge for us to prepare the term paper. First of all, we present our due
regards to the Almighty, who has provided us the brilliant opportunity to build and complete this
Term paper report successfully with good health & sound mind. Our course instructor,
Ms.Fatema Afreen
Lecturer, Department of Finance, Premier University helped us all the way through. He also
gave proper guideline about this term paper and also by not getting irritated with our unlimited
questions. We really want to express our gratitude to him for giving valuable advice and time,
which helped immensely in preparing this term paper.
Table of content
Chapter Contents Page No
Chapter 1 Introductory Aspect 4-8
1.1 Introduction 4
1.2 Objectives of the study 5
1.3 Methodology 6-7
1.4 Scope of the study 7
1.5 Limitations 8
Chapter 2 Theoretical Aspects 9-27
2.1 Capital Market 10-11
2.2 Types of Capital Market 12-14
2.3 Features of capital Market 15

5
2.4 Participants in capital Market 16
2.5 Suppliers and Borrowers in Capital market 17
2.6 Factors of capital market 18
2.7 Capital market instruments 19-20
2.8 Capital Market Investment 20
2.9 Stock exchange 21-22
2.10 Venture Capital in the Capital Market 22
2.11 Trading procedure in Capital Market 23-27
Chapter 3 Practical Aspects 28-91
3.1 Capital Market in Bangladesh 30
3.2 RisingOfCapitalmarketInBangladesh 30
3.3 Structure of capital Market In Bangladesh 31
3.4 Capital Market Scenario in Bangladesh 32-33
3.5 Bangladesh Stock market 33-60
3.6 Listing and Membership department of stock
Market
61-63
3.7 Securities and Exchange Commission (SEC) 64-66
3.8 Central Depository Bangladesh Limited
(CDBL)
67
3.9 Supply of and Demand for Financial Products 67-68
3.10 Importance of capital Market in the economy 69-70
3.11 Investment corporation of Bangladesh 70-71
3.12 Capital market for industrial development: 71-71
3.13 Debacles in Bangladesh Capital Market 73-74
3.14 Reform of the market after the debacles 75
3.15 The Capital Market and Non-bank Financial
Sector in Bangladesh
76-77
3.16 Findings 79-81
3.17 SWOT Analysis 83-85
3.18 Present scenario In Bangladesh 86
3.19 Role of Securities Markets in Economic
Development:
87
Development
87
3.21 Role Of trustee 88
3.22 Current Economy in Bangladesh 88

6
Chapater 1
Introductory Aspects
3.23 Capital Market development in Bangladesh 89
3.24 The Potential of the Bangladesh Capital
Market:
90
3.25 Problems of Capital Market In Bangladesh 91
Chapter 4 Conclusionary Aspects 92-99
4.1 Recommendation 93-98
4.2 Conclusion 99
Chapter 5 Ending Matters 100-102
5.1 Bibliography 101
5.2 References 102

7
1.1 Introduction:
The development of economy of any country depends mostly on the establishment of sound,
effective and efficient financial system of a country. Bangladesh capital market is one of the
smallest in Asia but the third largest in the south Asia region. It has to full fledge automated
stock exchanges namely- Dhaka stock exchange (DSE), and Chittagong stock exchange (CSE)
and an over-the counter exchange operated by CSE. It also consists of a dedicated regulator, the
Securities and Exchange Commission (SEC), since, it compliments rules and regulations,
monitors their complication to operate and develop the capital market. A well developed
financial system plays an important role in accelerating economic growth by mobilizing saving
and facilitating investment in an efficient manner.
Financial market is composed of different markets- Money market, Capital market, etc. All the
market play in interactive rule for the development of economy by formation of capital through
mobilizing funds, providing services, linking investors to the industrial entrepreneurs etc,
Besides, this requires sound regulatory framework, sound and investment sensitive
administrative infrastructure, fiscal supports for making their rule effective for economic
This chapter Includes:
1.1 Introduction
1.2 Objectives of the study
1.3 Methodology of the study
1.4 Scope of the study
1.5 Limitations of the study

8
development. It consist of central depository Bangladesh limited (CDBL), the only central
depository in Bangladesh that provides facilities for the settlement of transaction of
dematerialized securities in CSE & DSE. Everyday a large no. of new investor are involving to
this market and making their investment. A significant number of them don’t know much about
the capital market, how to trade in the secondary market.
1.2Objectives of the study:
General Objective:
The principle objective of the Term Paper is to know of Capital Market Role and Activities
of Bangladesh. To accomplish this practical objective following specific objective has been
covered.
Specific Objective:
• To identify the Role of capital market in Bangladesh.
• To identify the faced problems with capital market

9
• To make suggestions to improve the activities of capital market
• To show the impact of the capital market on the economy
• To acquired knowledge about capital market in Bangladesh.
• To identify various indicator of Bangladesh stock market growth.
• To know the functioning of Capital market in the Bangladesh economy
1.3Methodology:
In order to make the report as perfect as possible I here used data collection
procedures which articulate the way that I have followed in my report.
Data Collection Procedures: Data were collected in two ways.
-Primary ways
-Secondary ways
Primary ways of collecting data:

10
The primary data are those which are collected for the first time and thus happen to be original in
character. These types of data were collected from personal conversation with the personnel’s of CSE
and from the various financial documents which were not publicly published by performing my
internship program there. These are shown below in diagram-
Secondary ways of collecting data:
The secondary data are those which have already been collected by someone else and which
have already been passed through the statistical process. From my report purpose, secondary data
were collected mainly from internet to collect annual reports as well as financial highlights of the
company. Another important source was the annual reports of the companies and also from the
Year book of Leasing finance association which publishes financial data. So it has been shown in
diagram below-
Primary Ways
Conversation with personnel
of CSE
Financial Document (Not
Publicly Published)
Internet

11
1.4Scope of the study:
The study was limited to Capital Market in Bangladesh to be acquainted with the stock trading
procedure .we gathered information about various areas of the stock exchange, its managing
procedures, working systems and environments which are very helpful to know & to increase our
knowledge & to get more information and data regarding my topic “The trading system of CSE
and DSE”. The information section of Dhaka stock exchange is very rich that’s why I was able
to collect the required books, magazines, periodicals, journals, brochures, portfolio and the
Internet facilities.
1.5 Limitations of the study:
Some limitations of the Term paper are:
1. Data has not been updated by official website of Capital market that may require completing
this report with more accuracy and more dynamicity
2. Time is very short to analyze the data with the proper treatment
3. Lack of availability of sufficient data.
4. Due to Political Unrest Such as Blocked, Hartal etc unable to collect properly DSE
Information personally
Though the above limitations, I had tried with all of my efforts to know and find out the response
pattern of the subjects and consultation of relevant record and document. Data have reached a
fairly acceptable degree of accuracy.
Annual Report Secondary Ways Business
Magazine
Text book

12
Chapter 2
Theoretical Aspects
This Chapter Include:
2.1 Capital market
2.2 Types of Capital Market
2.3 Features of capital Market

13
2.1Capital Market:
Capital market can be termed as the engine of raising capital, which accelerates industrialization
and the process of privatization. In other words, capital market means the share and stock
markets of the country. It is a market for long term fund. With the emergence of the need for
infrastructural development projects, for setting up of new industries for entrepreneurial
attempts-now there are more frequent needs of funds. Participants in the capital markets are
many. They include the commercial banks, saving and loan associations, credit unions, mutual
saving banks, finance houses, finance companies, merchant bankers, discount houses, venture
capital companies, leasing companies, investment banks & companies, investment clubs, pension
funds, stock ex-changes, security companies, underwriters, portfolio-managers, and insurance
companies.
The capital market is market for securities, where companies and government can raise long-
term funds. Capital market is one of the most important sources for companies to raise money.
This allows business to the publicly traded or raises additional capital for expansion by selling
shares of ownership of the company in a public market. It is a market in which money is lent for

14
periods longer than a year. Thus, this type of market is composed of both primary and secondary
market. Capital market is the group of inter-related markets, in which capital is finance from is
lend or borrowed for medium and long-term and in case equities for unspecific periods. A capital
market is simply any market where a government or a company can raise capital to fund their
operation and long term investment. Selling bond and stock are two ways to generate capital thus
bond market and stock market as capital market.
Capital markets which consist of:
Stock markets: Stock markets which provide financing through the issuance of shares or
common stock, and enable the subsequent trading thereof.
Bond markets: Bond markets which provide financing through the issuance of bonds, and
enable the subsequent trading thereof.
Commodity Markets: Commodity Markets which facilitate the trading of commodities.
Derivatives markets: Derivatives markets, which provide instruments for the management of
financial risk.
Future Markets: Future Markets which provide standardized forward contracts for trading
products at some future date; see also forward market.
Insurance markets: Insurance markets which facilitate the redistribution of various risks.

15
Foreign exchange Markets: Foreign exchange Markets which facilitate the trading of foreign
exchange.
The capital markets may also be divided into primary markets and secondary markets. Newly
formed (issued) securities are bought or sold in primary markets, such as during initial public
offerings. Secondary markets allow investors to buy and sell existing securities. The transactions
in primary markets exist between issuers and investors, while secondary market transactions
exist among investors.
2.2 Types of Capital Market:
There are two types of capital Market,
Capital Market
Primary
Market
Secondary
Market

16
A. Primary Market:
The primary market deals with newly issued securities and is responsible for generating long
term capital.
Method of Floatation of Securities in Primary Market:
The securities may be issued in primary market by the following methods:
1. Public Issue through Prospectus:
Under this method company issues a prospectus to inform and attract general public. In
prospectus company provides details about the purpose for which funds are being raised, past
financial performance of the company, background and future prospects of company. The
information in the prospectus helps the public to know about the risk and earning potential of the
company and accordingly they decide whether to invest or not in that company Through IPO
company can approach large number of persons and can approach public at large. Sometimes
companies involve intermediaries such as bankers, brokers and underwriters to raise capital from
general public.
2. Offer for Sale: Under this method new securities are offered to general public but not directly
by the company but by an intermediary who buys whole lot of securities from the company.
Generally the intermediaries are the firms of brokers. So sale of securities takes place in two
steps: first when the company issues securities to the intermediary at face value and second when
intermediaries issue securities to general public at higher price to earn profit. Under this method
company is saved from the formalities and complexities of issuing securities directly to public.
3. Private Placement: Under this method the securities are sold by the company to an
intermediary at a fixed price and in second step intermediaries sell these securities not to general
public but to selected clients at higher price. The issuing company issues prospectus to give
details about its objectives, future prospects so that reputed clients prefer to buy the security from
intermediary. Under this method the intermediaries issue securities to selected clients such as
UTI, LIC, General Insurance, etc.
The private placement method is a cost saving method as company is saved from the expenses of
underwriter fees, manager fees, agents’ commission, listing of company’s name in stock
exchange etc. Small and new companies prefer private placement as they cannot afford to rise
from public issue.
4. Right Issue (For Existing Companies):
This is the issue of new shares to existing shareholders. It is called right issue because it is the
pre-emptive right of shareholders that company must offer them the new issue before subscribing

17
to outsiders. Each shareholder has the right to subscribe to the new shares in the proportion of
shares he already holds. A right issue is mandatory for companies under Companies’ Act 1956.
The stock exchange does not allow the existing companies to go for new issue without giving
pre-emptive rights to existing shareholders because if new issue is directly issued to new
subscribers then the existing equity shareholders may lose their share in capital and control of
company i.e., it would water their equity. To stop this pre-emptive or right issue is compulsory
for existing company.
5. E-IPOs, (electronic Initial Public Offer):It is the new method of issuing securities through
on line system of stock exchange. In this company has to appoint registered brokers for the
purpose of accepting applications and placing orders. The company issuing security has to apply
for listing of its securities on any exchange other than the exchange it has offered its securities
earlier. The manager coordinates the activities through various intermediaries connected with the
issue.
B. Secondary Market:
The secondary market handles the trading of previously issued securities and must remain highly
liquid in nature because most of the securities are sold by investors.
In secondary market companies get no additional capital as securities are bought and sold
between investors only so directly there is no capital formation but secondary market indirectly
contributes in capital formation by providing liquidity to securities of the company. If there is no
secondary market then investors could get back their investment only after redemption period is
over or when company gets dissolved which means investment will be blocked for a long period
of time but with the presence of secondary market, the investors can convert their securities into
cash whenever they want and it also gives chance to investors to make profit as securities are
bought and sold at market price which is generally more than the original price of the securities.
This liquidity offered by secondary market encourages even those investors to invest in securities
who want to invest for small period of time as there is option of selling securities at their
convenience.
Secondary Market has some features which are given as follows:
1. It Creates Liquidity:
The most important feature of the secondary market is to create liquidity in securities. Liquidity
means immediate conversion of securities into cash. This job is performed by the secondary
market
2. It Comes after Primary Market:
Any new security cannot be sold for the first time in the secondary market. New securities are
first sold in the primary market and thereafter comes the turn of the secondary market.

18
3. It has a Particular Place:
The secondary market has a particular place which is called Stock Exchange. However, it must
be noted that it is not essential that all the buying and selling of securities will be done only
through stock exchange.
Two individuals can buy or sell them mutually. This will also be called a transaction of the
secondary market. Generally, most of the transactions are made through the medium of stock
exchange.
4. It Encourages New Investment:
The rates of shares and other securities often fluctuate in the share market. Many new investors
enter this market to exploit this situation. This leads to an increase in investment in the industrial
sector of the country.
2.3 Features of capital Market: Capital market is a market for medium and long term funds. It
includes all the organizations, institutions and instruments that provide long term and medium term
funds.

19
1. Link between Savers and Investment Opportunities: Capital market is a crucial link
between saving and investment process. The capital market transfers money from savers to
entrepreneurial borrowers.
2. Deals in Long Term Investment: Capital market provides funds for long and medium term.
It does not deal with channelizing saving for less than one year.
3. Utilizes Intermediaries: Capital market makes use of different intermediaries such as
brokers, underwriters, depositories etc. These intermediaries act as working organs of capital
market and are very important elements of capital market.
4. Determinant of Capital Formation: The activities of capital market determine the rate of
capital formation in an economy. Capital market offers attractive opportunities to those who have
surplus funds so that they invest more and more in capital market and are encouraged to save
more for profitable opportunities.
5. Government Rules and Regulations: The capital market operates freely but under the
guidance of government policies. These markets function within the framework of government
rules and regulations, e.g., stock exchange works under the regulations of SEBI which is a
government body.
An ideal capital market is one:
1. Where finance is available at reasonable cost.
2. Which facilitates economic growth.
3. Where market operations are free, fair, competitive and transparent.
4. Must provide sufficient information to investors.
5. Must allocate capital productively.
2.4 Participants in capital Market:
Participants of capital market may be discussed in groups because of their similar activities.
Groups or clusters of the participants are discussed below
1. Loan provider: these types of organizations provide loan to capital market. Others can take
the loan from the loan providers such as savings organizations insurance organizations etc

20
2. Loan takers: A huge number of organizations want to take loan from the capital market.
Among them the following are prominent as govt. organizations, corporate bodies, on-profit
organizations, small business and local authorities.
3. Financial intermediaries: Financial intermediaries are media between loan providers and
takers. The financial intermediaries are insurance organizations, pension funds, commercial
Banks, financing companies, saving organizations, dealers, brokers, jobbers, non-profit
organization
4. Service organizations: Service organizations help to run capital market perfectly. these firms,
in one hand, help issuers or underwrites to sell their instruments with high value in other hand
help sellers and buyers to transect easily these are mainly service organization investment banks,
brokers, dealers, jobbers, security ,exchange commission , Rating service ,Underwriters.
5. Regulatory organizations: Regulatory organizations are mainly govt. Authority that monitors
and controls the capital market. It secure both the investors and corporations. it strongly protects
forgery in stock market. Regulatory organization controls the margin also. Central Bank, on
behalf of govt. generally controls the financial activities in a country.
With the above mentioned participant are involved with the capital market among transactions in
capital market are done and regulated
2.5 Suppliers and Borrowers in Capital market:
Major Supplier of capital Market:
- Commercial Bank
-Insurance Companies

21
-Business Corporations
-Retirement Funds
Major Borrower of capital Market:
-Treasury Department
-Corporations
-Securities Dealer
2.6 Factors of capital market:
Stock exchange: A stock exchange is a form of exchange which provides services for stock
brokers and traders to buy or sell stocks, bonds, and other securities. Stock exchanges also
provide facilities for issue and redemption of securities and other financial instruments, and
capital events including the payment of income and dividends. Securities traded on a stock
exchange include stock issued by listed companies, unit trusts, derivatives, pooled investment
products and bonds. Stock exchanges often function as "continuous auction" markets, with

22
buyers and sellers consummating transactions at a central location, such as the floor of the
exchange.
Investment corporations: Investment Corporation of Bangladesh is authorized to act as an
agent of the issuers and investors for private placements of securities. Under this arrangement,
Investment Corporation of Bangladesh places securities to individuals/institutions on behalf of
the issuer for which it charges fees. Investment Corporation of Bangladesh also acquires
shares/securities for its own portfolio both in pre-IPO placement and equity investment.
Broker House: Broker house helps in trading financial instrument among the investors and
corporate organization. Broker House acts on behalf of both parties
Clearing houses: clearing house is another factor of capital market. it resolve the dues among
various financial institutions.
Promoters: Promoters are themselves who established Joint Stock Company and taking the duty
of supplying initial capital. Promoters have great importance for industrialization for any
country.
Issue house: issue house is another important factor of capital market .issue house helps
corporation in issuing share and debenture and their efficient trading .issue house sometimes
takes the charge to issue and sell the shares, bonds, debentures etc .on behalf of the corporations
Industrial Banks: Industrial banks are providing long-term loan for the different industries .it
plays a vital role in establishing new farms.
Commercial Banks: commercial banks usually deal with short-term loans. But now-a-days it
disburse long-term loan also. So commercial banks also participate in capital market.
Government: Government is the key factor in capital market. Govt. regulates the capital market
.govt. is not only regulates but also provides money for industrialization. Sometimes it collects
money from capital market as well.
These are some factors of capital market that help tom operate the market effectively and
efficiently and help to the development of capital market and country also.
2.7 Capital market instruments:
Capital market instrument are responsible for generating funds for companies, corporations and
sometimes national governments. These are used by the investors to make a profit out of their
respective markets. There are a number of capital market instruments used for market trade,
including -
 Stocks
 Bonds
 Debentures

23
 Treasury-bills
 Foreign Exchange
 Fixed deposits, and others
Stocks: A type of security that signifies ownership in a corporation and represents a claim on
part of the corporation's assets and earnings. There are two main types of stock: common and
preferred. Common stock usually entitles the owner to vote at shareholders' meetings and to
receive dividends. Preferred stock generally does not have voting rights, but has a higher claim
on assets and earnings than the common shares. For example, owners of preferred stock receive
dividends before common shareholders and have priority in the event that a company goes
bankrupt and is liquidated.
Bonds: A debt investment in which an investor loans money to an entity (corporate or
governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds
are used by companies, municipalities, states and U.S. and foreign governments to finance a
variety of projects and activities.
Debentures A type of debt instrument that is not secured by physical assets or collateral.
Debentures are backed only by the general creditworthiness and reputation of the issuer. Both
corporations and governments frequently issue this type of bond in order to secure capital. Like
other types of bonds, debentures are documented in an indenture.
Treasury bills: short-term debt obligation backed by the U.S. government with a maturity of
less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5
million and commonly have maturities of one month (four weeks), three months (13 weeks) or
six months (26 weeks). T-bills are issued through a competitive bidding process at a discount
from par, which means that rather than paying fixed interest payments like conventional bonds,
the appreciation of the bond provides the return to the holder.
Foreign Exchange: The exchange of one currency for another or the conversion of one currency
into another currency. Foreign exchange also refers to the global market where currencies are
traded virtually around-the-clock. The term foreign exchange is usually abbreviated as "forex"
and occasionally as "FX."
Foreign exchange transactions encompass everything from the conversion of currencies by a
traveler at an airport kiosk to billion-dollar payments made by corporate giants and governments
for goods and services purchased overseas. Increasing globalization has led to a massive increase
in the number of foreign exchange transactions in recent decades. The global foreign exchange
market is by far the largest financial market, with average daily volumes in the trillions of
dollars.
Fixed Deposits: fixed deposit is the term which refers to a savings account or certificate of
deposit that pays a fixed rate of interest until a given maturity date. Funds placed in a Fixed
Deposit usually cannot be withdrawn prior to maturity or they can perhaps only be withdrawn
with advanced notice and/or by having a penalty assessed.

24
2.8 Capital Market Investment:
A capital market is a market where both the capital market investment makes the investors to
buy or sell securities in the capital markets. The stock market and bond market are types of
capital markets where investors can trade in stocks and bonds. The investments in the capital
market may be either in the bonds or stocks. Investments in the stocks or bonds may be either
investing in the new issues or in the existing securities. The primary capital market handles the
trading and investments in the new issues while the secondary capital market takes care of the
trading of existing securities. There are a number of financial regulators that monitor the capital
market dealings in order to protect the investors from fraud. U.S. Securities and Exchange
Commission is one such financial regulator that regulates the capital markets situated in their
designated countries for the best interest of the investors.
Stock Investment: The investment in stocks may in six different styles. Depending on the needs
and reasons of the investors, the efficiency of the investment is estimated. There are some
investors who depend on the advice of other people while purchasing or selling a particular
stock. There are technical investors who spend time in studying the stock patterns before trading
any stock. The economist investors take their decision of stock trading depending on the
economic forecasts. They are in the nature to take risks and get benefited in return following an
efficient market hypotheses. There are some other types of investors who rely on the information
given by the researchers, vendors and trade executives to make investment in the stocks. There
are value investors who try to value the stock independently of its market price. Finally, there are
conscious investors who depend on their own measurements and beliefs while making any stock
investment.
Bond Investment
Bond investment is different from that of stock investment. Bond investment is investing in the
debt instrument that is issued by a company or government. The bond investor is actually lending
money to the company while in return is promised to be paid the full principal amount plus a
fixed periodic payout. The yield on the bond is calculated by putting together the final principal
and total payouts received. The yield is the effective interest rate for the tenure of the bond.
2.9 Stock exchange:
The stock exchange provides a market place where shares can be bought and sold. The stock
exchange performs various functions simultaneously for the growth and development of
economy. It also depicts the economy as an instrument and helps to analyze the economic

25
condition of the country. Without strong position of stock exchanges the economy cannot be
predicted that it will be healthy in future.
Function of Stock Exchange:
(1) Providing Liquidity and Marketability to Existing Securities:Stock exchange is a market
place where previously issued securities are traded. Various types of securities are traded here on
regular basis. Whenever required, an investor can invest his money through this market into
securities and can reconvert this investment into cash. Availability of ready market for sale and
purchase of securities increases their marketability and enhances liquidity.
(2) Pricing of Securities: A stock exchange provides platform to deal in securities. The demand
and supply work freely in the stock exchange. In this way, prices of securities are determined.
(3) Safety of Transactions: Stock exchanges are organized markets. They fully protect the
interest of investors. Each stock exchange has its own laws and bye-laws. Each member of stock
exchange has to follow them and if any member is found violating them, his membership is
cancelled. For instance, if any broker working in stock exchange charges more commission than
stipulated from any investor or misleads him in any other way, then the management committee
of the stock exchange can fine the broker and even his membership can be cancelled.
(4) Contributes to Economic Growth: A stock exchange provides liquidity to securities. This
gives the investor a double benefit-first, the benefit of the change in the market price of securities
can be taken advantage of, and secondly, in case of need for money they can be sold at the
existing market price at any time. These advantages provided by the share market encourage the
people to invest their money in securities. In this way, people’s money gets invested in industries
and economic development becomes possible.
(5) Spreading Equity Culture: Share market collects every type of information (more
particularly about their economic condition) in respect of the listed companies. Generally, this
information is published or in case of need anybody can get it from the stock exchange free of
any cost. In this way, the stock exchange guides the investors by providing various types of
information. Consequently, the number of shareholders in companies is increasing continuously.
Thus, the stock exchanges are playing a vital role in ensuring wider share ownership.
(6) Providing Scope for Speculation: When securities are purchased with a view to getting
profit as a result of change in their market price, it is called speculation. It is allowed or
permitted under the provisions of the relevant Act. It is accepted that in order to provide liquidity
to securities, some scope for speculation must be allowed. The share market provides this
facility.
Role of Stock Exchange
The stock exchange admits companies for trading at their securities.

26
 It provides a market for raising capital by companies.
 It provides a market place for shares of listed public companies to be bought and sold, by
bringing companies and investors together at one place.
 The exchange’s role is to monitor the market to ensure that it is working efficiently, fairly
and transparently.
2.10 Venture Capital in the Capital Market:
Venture capital is the fund that is raised through capital market by specialized agents. This
Venture Capital is one of the main sources of funding for the new business companies. Venture
capitalists buy bonds and shares issued by a new company. They are not interested in getting
immediate dividends from the company in which they have invested. They want the companies
to expand their scale which will in turn increase the value of their invested capital. So, the
Venture Capitalists are generally interested in promoting new companies with high growth
prospect.
Capital Market is now becoming more global and the competition among the institutions are
rising in this era of “institutionalized” markets. A larger share of credit now flows through the
channels of capital market. Financing through capital market involves a much easier process
compared to financing through banks. Deregulation, growing competition, advanced technology
and fluctuating interest rates has resulted in increased efficiency of capital markets. Capital
Markets now has to offer more flexible ranges of financial instruments for borrowing and raising
funds which help the borrowers and investors to manage risks associated with lending and
investment, in a better way.
2.11 Trading procedure in Capital Market:
Process of Account Opening

27
The process of opening an account with the depository through a DP is similar to opening an
account with a bank.
Procedures:
1. Approach DP
2. Fill up an account opening form
3. Sign a standard agreement
All investors should open accounts with necessary documentary support of proof of identity and
get the registration/account number. The feature of this opening an account is to reduce the
chances of any disputes.
After Opening an Account one have two Accounts no.
1. Trading ID with Stock Broker
2. BO Account with DP
Rights and Obligation of an Investors
The right to access: the best price, the speediest service The right to get: Proof of price, proof of
brokerage charged, your money on time, your shares on time, shares that are genuine The right
for redress: against fraudulent price, against unfair brokerage, against delays of money of shares,
against investor unfriendly companies The obligation to be systematic: open a proper account
with your broker; have early deal recorded on an enforceable contact note The obligation to be
correct: Keep your shares in good condition; Keep your signature verification records up to date
The obligation to be timely: make sure you pay on time when you buy; make sure you deliver
shares in time when you sell; make sure you pay your broker his brokerage charge in time; make
sure to send shares for transfer in your name in time..
Trading/ settlement system:
 Investors sell shares in any of the stock exchanges linked to depository through a broker
of his choice
 Investors give instruction to his DP for debit of his account and credit of his broker’s
clearing number pool account
 On the pay-in day investor’s broker gives instruction to his DP for delivery to clearing
house of the relevant stock exchange
 The broker receives payment from the clearing house
 The investor receives payment from the broker for the sale in the same manner he would
receive payment for sale in the physical mode.
Investment in Share Market
-Initial Public Offerings (IPO)

28
 Infusion of new or fresh capital either through IPO or through a Right Offer
 Involvement of the general public in Primary Market for IPO share, debenture, mutual
funds through prospectus
 Risk Factor is attached, especially with new IPO shares
-Prospectus
Prospectus means any document prepared for the purpose of communicating to the general
public a company’s plan to offer for sale of its securities
Prospectus can be found from
 Prospectus is published in two dailies
 Prospectus is available with underwriters
 Listed Stock Exchange
 Issue managers
 With the Issuer
 SEC’s web page
Reading procedure of Prospectus
 Look for the purpose of the IPO
 Check the Risk Factors
 See how the company plan to tackle risk
 Past performance of the company
 Who are the directors
 What does the company produce/sell
 How many products does it have
 Age and contribution of each product
 What sort of market does it have
 Who are the major competitors
 Who are the major suppliers raw materials
 Who are the major buyers of its products.
 Production capacity of the company
 If low then what does it plan to do
 Reason(s) for low capacity utilization
 What is the state of its machinery
 When were they installed
 What will happen after the IPO
Buying in the Primary Market:
1. In order to buy shares issued by a company in the primary market, you will have to fill out a
special form, which is obtained from the brokers, the issuing company, or any branch of a

29
commercial bank involved in the particular issue of shares. Photo copies of such forms could
also be used.
2. In such a primary issue the minimum number of shares that can be applied for is usually 50,
and applications for higher quantities must be for multiple of hundred.
3. Application duly perfected and accompanied by check, bank draft or cash as indicated should
be sent to a branch of a bank engaged for the purpose or to a share broking company or the
company issuing the shares as stated in the prospectus
4.In the case of the issue of new shares which have a high demand, it is possible that the amount
of money the company is seeking from the issue would be found or subscribed fully, before the
closing date. Therefore, it is usually advisable to apply for shares in a primary issue within the
stipulated times of the prospectus.
5. If the issue is over-subscribed the applicant will in due course receive a refund of the money
paid for not getting shares through lottery. I f your application is accepted and shares are allotted
in your name you will be issued a share certificate by the company. However, you will not be
permitted to withdraw your investment from the company. This is because share investment as
equities have no maturity dates as with debt obligations. The company in which you have
purchased shares has not incurred a debt obligation by issuing shares. Further the Companies Act
prohibits a company buying back its own shares.
6. Everyone will in time earn a dividend, when the company declares dividends depending on its
profitability. Or else you may be allotted bonus shares or entitled to buy more shares on a rights
issue. However, if you wish to cover your shares into cash you can sell in the Stock Exchanges.
Secondary Market Investment: Before investing in Secondary Market you must have through
knowledge about capital and securities market well
 You must have analytical power to analysis the capital market as well as the national and
global economy in trade, finance & industry well
 It is not an easy market like that we see around us
 It is a risky, sensitive, speculative but calculative market and profitable one if invested
through analysis the capital market data in appropriate times and in appropriate securities
through risk management, otherwise not
 You may follow an investment cycle
 Risks may be diminished by making a minimum basket of 10 to 20 securities in your
portfolio
 You must have sufficient invest able money with you
 You must have ability to take risks
 You must have knowledge the causes of movement of price of a security by experience
 Risk is your so profit/loss is also your, remember it.
Objectives of investment:

30
1. Dividend income
2. Capital gain
 It is safe and lawful to invest through stock brokers/dealers/authorized representatives
 Fill up an account opening form with your stock-broker/stock-dealer/ authorized
representative as per Securities and Exchange Rule, 1987T
 They will keep money of clients in a consolidated customers’ account in a bank and they
will also maintain client wise separate accounts in separate register for money and share
documents as per the said rules
 It may be invested in cash or as per Margin Rule, 1999
 Investment will be done through written order
 Sale/Purchase order may be done through telephone but written order should be placed
within 24 Hrs
 Purchase/Sales order are two type:
(i) Open order and
(ii) Limit order
 No price and time fixed in order is called Open order which may cause conflict between
the investors and the broker, should be avoided. Generally such order is implemented as
per decision of broker
 Where price and time fixed in a order is called Limit order. It is safe and reasonable.
Clearing period
it is the time limit within which every days transaction by the purchase-broker and the sale-
broker must be cleared up with the stock exchange.
It is regulated by the Settlement of Stock Exchange Transaction Regulation, 1998 and
implemented by the Stock Exchanges
Settlement period
 It is the time limit within which the stock exchange must settle the transactions with the
sale-broker and the purchase-broker
 It is regulated by the Settlement of Stock Exchange Transaction Regulation, 1998 and
implemented by the Stock Exchanges
Purchasing of dematerialized shares
 Investors purchase shares in any of the stock exchanges connected to depository through
a broker of his choice and makes payment to his broker
 Broker arranges payment to clearing house
 Broker receives credit on his clearing account with his DP on the pay-out day
 Broker gives instruction to his DP to debit his clearing account and credit his client’s
account

31
 Investors give instruction to his DP for receiving credit in his investor account
 If the instructions match investors account with his DP is credited
Preference to buy dematerialized shares:
When buyer wants to buy dematerialized shares you become the owner of those shares as soon as
they are credited to your account. This is unlike the physical market where it will take a long
time. Further, the possibility of loss or theft of share certificates is completely eliminated.
Public offer
 Allotment of securities in public offerings will be done directly in dematerialized form
 In fact in the public issue application form you have to mention your DP account number,
any allotment due to you will be credited to your account.
Corporate action for receiving a bonus or a dividend;
 When any corporate event such as rights or dividend is announced for a particular
security, depository will give the details of all the clients having electronic holdings in
that security as of the record date to the company
 The company will then calculate the corporate benefit due to all the shareholders. The
disbursement of cash benefits such as dividend/interest will be done by the company
whereas depository will do the securities entitlements based on the information provided
by the company.
Chapter 3
Practical Aspects

32
This Chapter Include:
3.1 Capital Market of Bangladesh
3.2RisingOfCapitalmarketInBangladesh
3.3 Structure of capital Market in Bangladesh
3.4 Capital Market Scenario in Bangladesh
3.5 Bangladesh Stock market
3.6Listing and Membership department of stock
Market
3.7 Securities and Exchange Commission (SEC)
3.8 Central Depository Bangladesh Limited
(CDBL)
3.9 Supply of and Demand for Financial Products
3.10 Importance of capital Market in the economy
3.11 Investment corporation of Bangladesh
3.12 Capital market for industrial development:
3.13 Debacles in Bangladesh Capital Market
3.14 Reform of the market after the debacles
3.15 The Capital Market and Non-bank Financial
Sector in Bangladesh
3.16 Findings
3.17 SWOT Analysis
3.18 Present scenario In Bangladesh
Development:
3.20Role of Credit Rating Agencies
3.21 Role Of trustee
3.22 Current Economy in Bangladesh
3.23 Capital Market development in Bangladesh
3.25The Potential of the Bangladesh Capital
Market:
3.24 Problems of Capital Market In Bangladesh

33
Bangladesh: Profile
Geographic location 20°34’ &26°38’ North Latitude
88°01’ & 92°41’ East Longitude
Area (sq km) : 147570
Standard time : GMT+ 6 hours
Inflation (December, 2014) : 6.11
GDP (2013-2014) : 6.01
Per capital National Income (in TK): 35904

34
3.1Capital Market of Bangladesh:
Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia
region. It has two full-fledged automated stock exchanges namely – Dhaka
Stock Exchange (DSE) and Chittagong Stock Exchange (CSE). It also consists of a
dedicated regulator, the Securities and Exchange Commission (SEC), since, it implements rules
and regulations, monitors their implications to operate and develop the capita market.
3.2Rising OfCapitalmarketInBangladesh:
Our analysis revealed few core reasons of unexpected rising of capital market. These Reason Are
given below:
1. There are anti relation between supply and demand of stock.
2. Entrance of a lot of new companies into the market like, Grameen Phone.
3. Opening a great number of BO accounts which is more around three million
4. When the price was rising the regulatory had not taken any proper actions or implemented any
strong regulations to control the capital market.
5. Tendency of holding the stocks to make more profits.
6. Banks have invested more in capital market than 10% of their liabilities which is unlawful as
per act of Bangladesh Bank.
7. Many industrialists taken loans from banks to invest in authorized productive sectors but they
invested that loan amount in capital market.
8. Price hike in Z category shares which is abnormal as per categorization.
9. Tendency of mass people to get quick and huge profits from the capital market.
10. Mass people preferred investing in capital market more than saving in bank toget more
returns

35
3.3 Structure of capital Market in Bangladesh:
OTHERS
Security
exchange
commission
(SEC)
Chittagong
Stock
Exchange
(CSE)
Dhaka Stock
Exchange
(DSE)
Capital Market in Bangladesh

36
3.4 Capital Market Scenario in Bangladesh:
Although capital markets of different countries of the world collapsed in the face of global
recession, the capital markets of Bangladesh remained quite buoyant at that time. The market
capitalization and the general index increased remarkably during the period. Market
capitalization of the Dhaka Stock Exchange (DSE) rose from 21.4 percent of GDP in June 2009
to 39 percent of GDP in June 2010 indicating keen interests showed by the investors in the
capital market. By the end of June 2010, the number of BO (Beneficiary Owner) accounts has
increased to 25.64 lakh from 14.15 lakh at the end of June 2009. Given the growing number of
ordinary investors in capital markets, limited supply of securities and investors’ expectations for
more profit at times made the market volatile. Nevertheless, various steps have been taken to
maintain market stability and to establish a transparent and vibrant capital market while
deepening it. The Government has also started off-loading state-owned companies’ shares.
Already, 5 state-owned companies have completed off-loading of shares. As a result, confidence
on capital market of local and foreign investors has increased. The Securities and Exchange
Commission (SEC) has strengthened its surveillance on securities transactions and supervision
on market intermediaries so that market operates in transparent manner. The following steps
have been taken to streamline the capital market during FY2009-10.
New Investment in the Capital Markets: During FY2009-10, SEC allowed 10 companies to
raise Tk.1, 398.92 crore (including premium) as capital through Initial Public Offering (IPO).
The subscription money received against the said companies was Tk. 9,125.96 crore, which was
27.74times higher than the amount of public issues, indicating huge demand of securities in the
market.
Mutual Funds: SEC has given approval of 8 companies to publish prospectus of mutual funds
for raising capital (total Tk.850 crore) through IPO under Securities and Exchange Commission
(Mutual Fund) Rules, 2001 during FY2009-10.
Raise Paid-up Capital: During FY2009-10, SEC has given consent to 50 private limited
companies and 52 public limited companies to raise paid up capital of amount Tk.1,354.59 crore
and Tk. 4,496.35 crore respectively.
New Registration: During FY2009-10, SEC has given registration certificate to 52 stock
broker/dealer of DSE and to 44 stock broker/dealer of CSE. During this period, registration
certificate were given to 1,289 authorized representatives of DSE and to 222 authorized
representatives of CSE. Besides, 19 depository participant certificates were also issued.
Enforcement Action:
During FY2009-10, SEC has taken enforcement actions against 263 issuer companies and other
market intermediaries for non-compliance of securities related laws
Central Depository Systems (CDS): At the end of June 2010, the number of active BO
accounts in Central Depository Bangladesh Ltd (CDBL) was 25.64 lakh and the number of
eligible companies was 267. They hold around 99 percent of market capitalization. As a result of

37
dematerialization, time required for settlement reduced and existence of fake shares is abolished,
which plays a significant role in development of market infrastructure.
Implementation of Book Building Method: As an alternative IPO valuation method, the book
building method was introduced in Bangladesh capital market for the first time through a
notification issued on 11 March 2009. This will attract private companies with good track record
and sound fundamentals to raise capital from the market, where issuer may get better price of
their shares depending on institutional demand for the shares.
OTC Market: The OTC Market, popularly used for the secondary market corporate bond
trading, does not exist in Bangladesh though; Securities and Exchange Commission (Over-the-
Counter) Rules, 2001 was promulgated by the SEC in 2002. 5 respondents among current issuers
and 4 respondents among prospective issuers informed its non-existence and expected its
introduction as quickly as possible. Transparency in pricing does not exist in the OTC market.
This opaqueness in pricing has contributed to wide bid-ask spread, making transactions
unnecessarily costly and inefficient to investors. A trading mode concerning OTC may be
established to ensure proper assessment of counterparty risks and Pricing flexibility of corporate
bonds.
-Establishment of OTC Market at DSE: To facilitate transaction of companies delisted by
DSE, DSE has established Over-the-Counter (OTC) market since September 6, 2009 upon
instruction of the Commission. Bangladesh Institute of Capital Market: To educate the investors
and market intermediaries; and to train the companies in corporate governance in the listed
companies ‘Bangladesh Institute of Capital Market’ has been established.
Capital Market Governance Project: To reform the market, improve the institutional capacity
and human resources and enhance the market surveillance system, SEC has taken a project
named ‘Improvement of Capital Market Governance Program’ with assistance of the
Government and Asian Development Bank (ADB), which is now under implementation.
Training Programme: The Commission, in association with the Dhaka and Chittagong Stock
Exchanges arranged 24 investors training programmed, where a total of 705 participants
attended. Besides, a total of 953 authorized Representatives of the members of the stock
exchanges have been trained during this period.

38
3.5 Bangladesh Stock market:
Though formidable obstacles, our country’s securities market has been gaining momentum. Even
in the bank drop of Global Financial Crisis 2008 when the stock markets in almost all the developed countries
crashed and Government of those countries spent thousands of dollars to rescue the market. Both depth and
dimension in Bangladesh capital market has been becoming gradually strong and securities market registered
significant growth at the initial stage and later market fell a little bit. The reason is might be that the amount of
foreign portfolio in Bangladesh securities market is more or less only 2%. But lack of supply of fundamentally
sound share has-been causing overheating situation and circumstance like overpricing has been causing
phenomenon here in recent times. Transaction has risen from a daily Tk. 250 core 2 years ago to Tk. 2500 core
now and DSE General Index has risento record 8918 from 2400two years back. But demand andsupplyshould
matchatacertainpointtothetuneofbringingtimeboundbalanceinthesecuritiesmarket
There are only two stock markets in Bangladesh
1. Dhaka Stock Exchange Limited (DSE)
2. Chittagong Stock Exchange Limited (CSE

39
Dhaka Stock Exchange

40
Dhaka Stock Exchange
Dhaka stock exchange (Generally known as DSE) is the main stock exchange of
Bangladesh. It is located in Motijheel at the heart of the Dhaka city. It was incorporated in
1954. Dhaka stock exchange is the first stock exchange of the country. As of 31
December 2007, the Dhaka Stock Exchange had 350listed companies with a combined
market capitalization of $26.1 billion
History of the Dhaka Stock Exchange (DSE):
First incorporated as Stock Exchange Association Ltd in 28 April 1954 and started formal in
1956. The formula for calculating DSE all share price index was changed according to on 1st
November 1993. It was initiated in 24 January 2004. As of November 16, 2009, the benchmark
index of the Dhaka Stock Exchange (DSE) crossed 4000 points for the first time, setting another
new high at 4148 points. It was renamed as East Pakistan Stock Exchange Ltd in 23 June 1962.
Again it was renamed as Stock Exchange Ltd in 13 May 1964. After the in 1971 the trading was
discontinued for five years. In 1976 trading restarted in Bangladesh, the index crossed 8500
points and finally crashed in the first quarter of 2011. Millions of investors lost their money and
came out onto the street blaming the speculators and regulators for the bubble that finally burst.

41
Current Address of Dhaka stock exchang
Dhaka Stock Exchange - Bangladesh
Stock Exchange Building
9-F, Motijheel Commercial Area
Dhaka-1000, Bangladesh
Tel : 880-2-9551935, 9666940-49 (PABX)
Fax : 880-2-9564727
E-mail : dse@citechco.net
Management operation of DSE:
The management and operation of Dhaka Stock Exchange is entrusted on a 25 members Board
of Director. Among them 12 are elected from DSE members, another 12 are selected from
different trade bodies and relevant organizations. The CEO is the 25th ex-officio member of
the board. The following organizations are currently holding positions in DSE Board
•Bangladesh Bank
•ICB
•President of Institute of Chartered Accountants of Bangladesh
•President of Federation of Bangladesh Chambers of Commerce and Industries
•President of Metropolitan Chambers of Commerce and Industries
•Professor of Finance Department of Dhaka University
•President of DCCI (Dhaka Chamber of Commerce and Industry)

42
DSE Chairman and management Bodies

43

44
Management of DSE/Board of Directors DSE: Main task of the board of director is
making policy. DSE has a policy making body of 24 members, 12 are elected and 12 selected
councilors. The board members at present are as follows:
Chief Executive Officer
F. M. Shariful Islam
PABX: 9564601,7175705-9, Ext-108
Email: sharif@dsebd.org, dse@bol-online.com
Chief Financial Officer
Satipati Moitra, M.Com, FCMA
PABX: 9564601,7175705-9, Ext-107
Mobile: 01713425800
Email: satipati@dsebd.org, dse@bol-online.com
Chief Technology Officer
A. S. M. Khairuzzama
Phone: 9564601,7175703-11, Ext-123
Mobile: 01713425801
Email: skzaman@dsebd.org, dse@bol-online.com,
kzaman_bd@yahoo.com
General Manager & Secretary
Shaikh Mohammadullah, MBA (IBA), FCS
Phone: 9564601,7175705-9, Ext-102
Mobile: 01713333224
Email: smullah@dsebd.org, dse@bol-online.com

45
President, DSE Room No – 508 ,
Stock Exchange Building ,
9/F , Motijheel C.A.,
Dhaka-1000
Ph: 9551960, 9559925,
PABX : 9564601, 7175705-9
Ext. 508Navana Villa
Flat No. 201,
Plot No. 10
Road No. 118
Gulshan, Dhaka
Phone: 8823500, 9895837
Mobile: 01819-219396
Senior Vice-President, DSE Suite No. 1002-3
9/E, Motijheel C/A,
Dhaka-1000
Phone: 9561070, 9561232, 9564959, 9569302
Fax: 9562254, 9564991Apartment 2B,
House No.16,
Road No. 01,
Baridhara Diplomatic Zone,
Dhaka-1212
Res: 8859055
Mobile: 01711-546802
Vice-President, DSE Room No: 905, DSE Annex Building (8th Floor) 9/E, Motijheel C/A,
Dhaka-1000
Phone: 7175716, 9570985, 7166096, 7170993-4
PABX: 9564601, 7175705-9
Ext- 429Phone:
Mobile: 01715864740
Board of Directors of DSE
Mr. Md. Rakibur Rahman
Mr. Saiful Islam
Mr. Md. Shakil Rizvi

46
Director, DSE Room No – 618, 619, 709, 715
9/F, Motijheel C.A.
Dhaka-1000
Phone: 9551815, 9564573,9568417
PABX : 9564601,7175705-09
Ext-715/7099/2, Bagabati Banerjee Road
Hatkhola
Dhaka – 1203
Mobile: 01711-537753
Director, DSE Room no. 704 (6th Floor)
Modhumita Building,
158-160,Motijheel C.A.,
Dhaka-1000.
Ph: 9557677
PABX: 9557677, 7168345Road No. 104,
House No. 5/F
Flat No. A-4/S
Gulshan -2,
Dhaka – 1212
Phone: 8814385
Mobile: 0175212755
Director, DSE Room no. 620 , 621 & 635
9/E, Motijheel C/A,
Dhaka-1000
Phone:9553321, 9563287,9554712
PABX :9564601, 7175705-09 Ext:620, 621, 635
Mr. Abdul Haque
Mr. M.A. Quayum
Mr. Md. Hanif Bhuiya

47
Director, DSE House No. – 8A,
Road No. – 50,
Gulshan-2,
Dhaka – 1212
Phone: 9887423, 9892714
Fax: 9894877House No. 14 (5th Floor),
Road No.- 140,
Gulshan – 01,
Dhaka – 1212
Res: 8855098
Mobile: 01711-567122
Director, DSESuite No. – 603 (5th Floor), ModhumitaBuilding,
158-160 Motijheel C/A,
Dhaka-1000
Phone: 7174368, 7174451,
9561993116, Bashir Uddin Road, Kalabagan, Dhanmondi,
Dhaka-1205
Res: 9115571, 8144836
Mobile: 01711-542131
Director, DSERoom No. 322
9/E, Motijheel C/A,
Dhaka-l000
Phone: 9561868, 9570496, 7174256, 7174315, 9556792 Fax: 9555384, 95622074/404, Eastern
Point
8-9, Shantinagar,
Dhaka
Res: 8354163
Mobile: 01819-213180
Director, DSERoom No – 901 (8ht floor)
9/E, Motijheel C/A,
Dhaka-l000
Phone: 9666927,9667011
PABX: 9564601 Ext-524Phone: 9341147
Mobile: 01711-526213
Mr. Masudul Haque
Mr. Mohammad Nasir Uddin
Chowdhury
Mr. Md. Rafiqul Islam
Ms. Lailun Nahar Ekram

48
Function of Dhaka Stock Exchange (DSE):
General Function of DSE
1. Listing of Companies. (As per Listing Regulations).
2. Listing of securities and ensuring compliance by the issuers.
3. Providing the screen based automated trading of listed Securities.
4. Trading provisions for listed securities through efficient trading platform.
5. Settlement of trading. (As per Settlement of Transaction Regulations)
6. Gifting of share / granting approval to the transaction/transfer of share outside the
trading system of the exchange (As per Listing Regulations 42)
7. Market Administration & Control.
8. Settlement and Clearance of executed trades.
9. Publication of Monthly Review.
10. Monitoring the activities of listed companies. (As per Listing Regulations).
11. Investor’s grievance Cell (Disposal of complaint bye laws 1997).
12. Investors Protection Fund (As per investor protection fund Regulations 1999)
13. Announcement of Price sensitive or other information about listed companies through
online.
14. Updating existing Regulation and promulgating new rules and regulation.
15. The management of DSE should be vested with professionals and should not
in any way be linked with the ownership of stock exchange and other firms
16. To train the investors about fundamentals to deal in share transactions
17. To punish the member brokers for breaching of contract
Automated Trading Function:
Globally the developments in information & communication technologies (ICT) have created a
new instance in the securities market operations. Stock Exchanges all over the world have
realized the potentiality of ICT and inclined to the electronic trading systems. It was understood
by DSE that technology would ensure transparency, timeliness and satisfaction in customer
service. Considering those DSE introduced Automated Trading System on 10th August
1998.Considering market growth the Automated Trading System was upgraded two times. The
recently Upgraded Trading System was started from 21st December, 2008.
Trading Day:
The trading shall be open on all days except bank holidays as declared under the Negotiable Instruments
Act, 1881 4.Provided that where the Council, in consideration of any exigencies, considers it expedient
may declare that there shall not be any trading on any other day as may be specified in the resolution
under immediate intimation to SEC: Provided further that the Council may, from time to time, refax the
trading days in the interest of the Stock Exchange under immediate intimation to SEC.

49
Trading Period: Unless otherwise decided by the Council, the trading period shall be between10-30
AM to 2-30 PM on all trading days. Provided that the Council may, in consideration of any particular
circumstance or situation, extend, curtail or change the trading period, including session timings of any
particular trading day under immediate intimation to SEC: Provided further that the power under the first
proviso may also be exercised by the Management Team of DSE comprised of the CEO, the Secretary
and the heads of relevant departments of DSE, if, in their opinion, convening of Council meeting is not
convenient or expedient in consideration of the circumstances or situation concerned.
Qualification for Trading
(1) A member shall qualify himself for trading if he:
(a) Obtains a registration certificate from the Commission issued under regulation 5(4) of the
Securities and Exchange Commission (Stock-Dealer, Stock-Broker and Authorized
Representative) Regulations, 1994.
(b) Becomes a member of the DSE Clearing House.
(c) Is not otherwise barred by DSE or SEC under any law, rule or regulations for the time being
in force for trading.
Availability of Workstation
1) Depending on the availability, the DSE shall make available the system to the members by
providing trading workstation connections.
(2) The number of trading workstations for each member shall be such as may be decided by the
Council.
(3) The CEO may shutdown trading in the event the system becomes inoperative or inaccessible
to all or part of the trading workstations under immediate intimation to SEC.

50
Types of Markets of DSE: There shall be the following four markets in the system namely:
(a) Public Market Matching in this market is automatic based on the touchline prices which
follow normal settlement procedure
(b) Spot Market: Matching in this market is also automatic, settlement of which follows
procedure for spot transactions. The Management Team may put an instrument on
compulsory spot to curb volatility in prices of the instrument.
(c) Block Market: This is the market for bulk selling and buying on automatic matching
with equal quantity and best price (all or none condition) basis
(d) Odd Lot Market: Odd lot shares are traded in this market on automatic matching with
equal quantity and best price (all or none condition) basis.
Spot
Market
Dhaka Stock
Exchange
Public
Market
Odd Lot
Market
Block
Market

51
Objectives of DSE:
The prime objective of the DSE is to create a nation-wide stock market also beyond the national
boundary, which will simultaneously act as a platform for industrial entrepreneurs and general
investors. Explicitly the objectives of DSE are,
1 To develop a strong platform for the entrepreneurs for raising capital.
2 To provide an investment opportunities for small and large-scale investors.
3 To develop a transparent market ensuring investors interest.
4 To provide a fully automated trading, Clearing and settlement system to ensure quick,
easy, accurate and easily accessible to all transactions.
5 To attract non-resident Bangladeshis to invest in Bangladesh Stock market.
6 To attract foreign institutional investors to invest in Bangladesh stock market.
7 To collect, preserve and disseminate data and information on stock market.
8 To develop a corporate culture through mandatory corporate membership.
9 To develop a research cell for analyzing status of the market and economy.
Who can invest In DSE:
Anyone can invest in Dhaka stock exchange, be they are Bangladeshi residents or NRB n
investors. They can access the market by contacting their stockbroker who will act on their
behalf. Trading the Dhaka stock exchange is effected by a correspondent broker in the host
country who acts as agent for the client broker in the home market the home broker is located in
the country where the order originated, while the host broker is located in the country where the
trade is executed. There is no income qualification required for participating in the market.
Many people would like to invest in the stock market to try and improve their financial fortunes.
In recent years, a number of average people have made a lot of money by investing in the stock
market There are a number of mythology that work to keep newcomers from the market, Such as
the belief that investing in stocks is an extremely risky business, or that you have to be rich and
well educated to invest in stock and bonds.

52
Policies of Dhaka Stock Exchange (DSE):
DSE can introduce automatic monitoring systems that may control price manipulation,
malpractice and inside trading. The management of DSE should be vested with professionals and
should not in any way be linked with the ownership of stock exchange and other firms. It should
train the investors about fundamentals to deal in share transactions and punish the member
brokers for breaking of contact. It can make sure all the listed companies publish their annual
reports with actual and proper information that can ensure the interest of the investors. To force
the listed companies to declare and pay regular dividends through conducting Annual General
Meeting (AGM) and make arrangement to set up merchant banks and floatation of more mutual
funds particularly in the private sectors. More bank, insurance companies and other financial
institutions should be encouraged to deal in share business directly. The management of DSE
should be vested with professionals and should not in any way be linked with the ownership of
stock exchange and other firms. It should train the investors about fundamentals to deal in share
transactions and punish the member brokers for breaking of contact.

53
Performance of DSE:
Years 2006 2007 2008 2009
Listed Issues
No. of Securities 310 350 412 443
% of Annual Growth 8.39 12.9 17.71 7.52
No. of Securities in mn 1546.05 2081.00 2759.00 3136.00
% of Annual Growth 24.27 21.83 32.58 13.66
Issued Capital &
Debentures
-Tk. M n 118437 214472 372156 457944
-US$ mn 1711.52 3127.33 5409.24 6634.95
% of Annual Growth 68.44 81.09 73.52 23.05
Market Capitalization
-Tk. Mn 323367.94 742195.87 1059530 1312773
-US$ mn 4672.95 10822.34 15400 19020.18
% of Annual Growth 38.74 135.28 42.76 23.90
Conversion Rate 69.2 68.58 68.80 69.02
Turnover of Listed
Securities
Total Turnover
Volume in mn 797.77 2831.23 4605.38 3480.54
Value (Tk. mn) 65079.11 322867.07 667964.82 565038.22
Value (US$ mn) 1099.3 4707.89 9708.79 8186.59
% of Annual Growth 0.38 396.11 106.89 -15.41
Daily Average Transaction
Volume in mn 3.5 11.95 19.43 27.84
Value (Tk. mn) 285.43 1362.31 2818.42 4520.31
Value (,US$ mn). 4.82 19.86 40.97 65.49
% of Annual Growth 13.58 377.28 106.89 60.38
Initial Public
Offering(IPO)
NO.of Public Issues 7 14 12 4
Size of Public Offer
~Tk. Mn 1433.95 4638.13 3043.41 337.00
-US$ mn 24.22 67.63 44.24 4.88
% of Annual Growth 13.29 223.45 -34.38 -88.93
Size of Pre IPO Placement
-Tk. Mn 146.72 1540.00 800.00 60.00
-US$ mn 2.47 22.46 11.63 0.87
% of Annual Growth 0.56 949.62 -48.05 -92.50
Public Subscription
-Tk. Mn 15241.93 37937.06 37821.71 15477

54
-US$ mn 257.46 553.18 549.73 224.24
% of Annual Growth < (3.50) 148.90 -0.30 -59.08
Over Subscriptions Times
-Value (Tk. mn) 10.62 8.18 12.43 45.84
% of Annual Growth (14.90) (22.98) 51.96 268.79

55
Chittagong Stock Exchange:
The Chittagong Stock exchange was established in 1995 as the second stock exchange in the
country, and located in the port city of Chittagong in southeastern Bangladesh. The CSE trading
system: CHITTRA has four modules including Broker’s Workstation (BWS), the exchange
comprised of twelve board members and run by an independent secretariat from the first day of
its beginning. Chittagong Stock Exchange (CSE) was formerly opened by then Honorable Prime
Minister of Bangladesh on November 4, 1995. CHITTRA has four modules including Broker’s
Workstation (BWS), Market Operations Systems (MOPS), Surveillance and VECTOR. Founder
member of the proposed Chittagong Stock Exchange (CSE) approached the Bangladesh
Government in January 1995 and obtained the permission of the Securities and Exchange
Commission (SEC) on February 12, 1995 for establishing the countries second Stock Exchange.
The exchange comprised of twelve board members and run by an independent secretariat from
the first day of its beginning. The Exchange comprised of twelve Board members, presided by
Mr. Amir Khosru Mahmud Chowdhury (MP) and run by an independent secretariat from the
very first day of its inception.

56
Chittagong Stock Exchange
1080, Sk. Mujib Road, Agrabad
Chittagong, Bangladesh
Tel: 880-31-714632, 714633, and 714100
Fax: 880-31-714101
E-mail: cse@spctnet.com
Objective of CSE:
•Develop a strong platform for entrepreneurs raising capital
•Provide a fully automated trading system with most modern amenities to ensure
quick, easy, accurate transactions and easily accessible to all;
•Undertake any business relating to the Stock Exchange, such as a clearing house, securities
depository center or similar activities;
•Develop a professional service culture through mandatory corporate membership;
•Provide an investment opportunity for small and large investors;
•Attract non-resident Bangladeshis to invest in Bangladesh stock market;
•Collect preserve and disseminate data and information on stock exchange;
•Develop a research cell for analyzing status of the market and economy
•Increase business turnover
•Modernize trading system
•Ensure effective relationship management
• Achieve high level of confidence & professionalism
• Engage in product and market diversification
• Contribute to capital market policy development
• Ensure exchange related quality services

57
Management bodies of CSE:
The CEO is responsible for implementing the decisions of the Board, the day to day running of
the exchange and formulating strategic plans for agreement with the board.
Following are the functions of the CEO and the various Departments of CSE:
Systems: The Systems Department carries out the following functions:
· Deal with user queries
· Manage communication network
· Manage information technology developments and suppliers
· manage trading and operate Clearing & Settlement System
· Maintain master file
· Print daily reports and produce statistics
· Support internal users and setup and train new system users
Clearing, Settlement & DP: This Department is Responsible for:
· Ensuring exchange clearing and settlement activities through clearing house
· Handling settlement failure
· Handling auction settlement
· Maintenance of members margin
· Provide depository related services
Market Operations: This Department Carries Out the Following Functions:
· Monitor public information Management

58
Mr. Syed Sajid Husain
Chief Executive Officer
Mr. Ahmad Dawood
Deputy General Manager,
Company Secretary & Head of
Finance
Mr. Mohammed Mazbah Uddin
Deputy General Manager, Head of
Information Technology Services
Mr. Md. Ghulam Faruque
Dhaka Office
Mrs. Sonia Hossain
Market Regulations
Mr. Md. Mortuza Alam
Assistant General Manager,
Market Regulations
Mr. Mohammad Monirul
Haque
Clearing & DP Services
Mr. Md. Mortuza Alam
Market Regulations
Mr. Maksud-ur-Rahman
Market Development and
International
Management Bodies of Chittagong stock Exchange

59
Chairman of Chittagong Stock Exchange
CSE

60
Registration procedure of CSE:
A member may resign from the Exchanges by giving two month's notice in writing to the Chief
Executive of the Exchange of his intention so to resign. The Chief Executive on receipt of such
notice shall forthwith post it on the Notice Board for a period not less than one month for any
objections that may be raised and received by the Chief Executive in writing. On the expiration
of this one month, the CEO shall place the resignation with any objections received before the
Board who may accept the resignation at their discretion. The Board shall not be bound to give
any reason for their refusal to accept any resignation. On the acceptance of the resignation of a
Member by the Board, such Member shall cease to be a member of the Exchange. His name shall
be removed from the Register of Members of the Exchange and his card shall become the
property of the Exchange. The Board may by an Expulsion and suspension of member’s
Resolution expel any member of the Exchange –
1. False Declaration: False Declaration Who has in the opinion of the said Board made a false
declaration in his application for admission to the membership.
2.Criminal Offence: Criminal Offence Who has been convicted of a criminal offence which in the
opinion of the said Board renders him unfit to be a Member of the Exchange?
Provided that such resolution shall be passed by a majority of three-fourth of the Members present at a
meeting of the Board at which not less than one-half of all the Members of the Board shall have been
present.
3.Member of Association of CSE:
Who becomes Member of, or subscriber to, or becomes shareholder or debenture-holder in any
institution, association, Company, or corporation, or is directly or indirectly interested in such an
institution establishing and functioning within the territorial limits of Chittagong where dealings in
stocks, shares, bonus vouchers and like securities are carried on.
Explanation: For the purpose of this rule five or more members of the Exchange or their employees
making any bid or offer or entering into any contract or transaction in stocks, shares and like securities
before or after business hours or during holiday or at any place other than the floor of the Exchange shall
be deemed to be members of an association other than the Exchange.

61
4.Fine AND Penalties:
The Board shall by a resolution suspend any Members of the Exchange, who within fifteen days
after notice in writing has been served upon him by the Chief Executive of the Exchange fails to
pay any subscription or fine or penalty imposed upon him by the said Board in accordance with
any Rule for the time being in force and the said Board shall expel any such member who within
a further period of thirty days fails to pay any such subscription or fine or penalty or dues the
Exchange.
5.Suspension of a Member
· Without prejudice to the scope of the power of suspension vested in the Board, a Member may
also be suspended in the following circumstances: -
- When, in the opinion of the Board, the Member conducts business in a manner prejudicial to
the Exchange by making purchase or sale, or offers of purchase or sale, of securities for the
purpose of upsetting the equilibrium of the market or bringing about a condition in which prices
will not fairly reflect market values.
- If, in the opinion of Board, the Member is in such financial condition that it should not be
permitted to continue its business in consideration of safety either to its customer, creditor or to
the Exchange.
-Where a Member is reasonably suspected of having conducted itself in such a manner which
calls for disciplinary action and/ or an investigation is being conducted into the affairs of the
Member for this purpose.
The Board shall, under no obligation whatsoever, be liable to compensate a Member suspended
under these Regulations even if the investigation subsequently vindicates the conduct of such
Member.
·-The suspension shall continue until the Member has been allowed by the Board to resume its
business on its paying such deposit or doing such act or otherwise complying with the
requirements or to fulfilling the conditions for doing business.
-A member shall be allowed to be heard by the Board, in addition to an opportunity for
submitting its explanation, before being suspended. But, in all cases, decision of the Board shall
be final and binding upon such Member
· Monitor, receive and disseminate regular company information
· On-line surveillance

62
· Receive and disseminate price sensitive company information
· Receive and manage investor complaints
· Receive and manage other complaints
6.Listing, Marketing & Education: This Department is Responsible for the Following:
· Arrange training
· Ad hoc legal problems
· Maintain master organ gram
· Maintain personnel files and staff list
· Monitor and record leave requests and leave taken
· Monitor rules and regulations
· Monitor, receive and disseminate regular company information
· Respond to requests for information, members queries and complaints
Finance & Administration: This Department is Responsible for the Following:
· Conducting statutory and management meetings of the company and provide secretarial service
relating thereto
· Prepare Annual and periodic Financial Statements
· Prepare Budgets and monitor the income and expenditure with the budget
· Controlling banking operations of the company
· Compliance of taxation rules and policies including withholdings, payments and filing of tax
returns and documents
· Issuing certificates to brokers and other authorities
· Maintaining IPF(Investors Protection Fund) Accounts

63
· Oversee the development activities of the Exchange including acquisition and development of
properties, schedule payments and coordinate associated activities
· Providing support to develop and implement corporate strategies, mission and vision
Research, Corporate Development & Information:
This Department Carries Out the Following Functions:
· Maintain library contents
· Press cuttings and press relations
· Produce portfolio and other CSE publications
· Public relations
· Investor's information cell
Categorization of listed company CSE and DSE
Category DSE CSE
A 155 130
B 18 13
G 1 1
N 13 14
Z 98 72
Debenture(A category) 8 2
Treasury Bonds 75 -
Grand total 368 232

64
Criteria of the share Category:
The SEC classified firms in terms of A, B, G, N and Z categories that had not only guided retail
investors to know weak shares but also helped reducing netting and gambling done by a few
hidden consortia.
■“A” Category Companies: Companies which are regular in holding the Annual General
Meetings (AGM) and have declared dividend at the rate of 10 percent ormore in a calendar year.
(Mutual fund, debentures and bonds are being traded inthis category).
■“B” Category Companies:
Companies which are regular in holding the AGM but have failed to declare dividend at least at
the rate of 10 percent in a calendar year.
■“G’ Category Companies:
Greenfield companies.
■“N’ Category Companies: All newly listed companies except Greenfield companies will be
placed in this category and their settlement system would be like B-Category companies.
■“Z’ Category Companies:
Companies which have failed to hold the AGM or failed to declare any dividend or which are not
in operation continuously for more than six months or whose accumulated loss after adjustment
of revenue reserve, if any is negative and exceeded its paid up capital.
Classification of Shareholders as on 30 June, 2012

65
3.6 Listing and Membership department of stock Market:
Every company must be listed in the Stock market for working thereon and they have to fulfill various
formalities. The Listing and Membership department deals with the various formalities of listing and
membership with CSE and DSE. Formalities related with the enlistment of a company and membership
and discussed in below.
Listing Section
If the companies willing to expand their market may apply for listing with the DSE, according to
the manner prescribed in the Listing Regulations. ‘Listing Company’ means a Company or a
body corporate or corporation, which has been listed in accordance with the regulations, and
whose securities are listed and include provisionally listed companies. Unless the company or the
securities have been listed and permission for such dealing has been granted, no dealings in
securities of a company shall be allowed
Eligibility for Listing
The Company has to be a Registered Public Ltd. that must be incorporated in Bangladesh under
the Companies Act.1994 with the office of the Registered of Joint Stock Companies and Firms.
Shares to a listed company can be issued through primary market or secondary market.
Application of listing
Application for listing in the stock exchange should be made as per Form 1, under Section (9) of
the Securities and Exchange Ordinance -1969 Section 140 of the Companies Act. 1994, within
10 days from the date of publish of the Company’s prospers. The stock exchange shall grant
permission within a maximum period of 3 months from the date of receipt of listing application.
In case, the permission is refused, the reason thereof will be communicated to the applicant and
also to the Securities & Exchange Commission within 2 weeks of the decision. If reused, the
applicant may move a fresh application after six months from the date of such refusal unless the
Board otherwise decides.

66
Documents to be submitted
At the time of applying for the listing, the following documents to be submitted:
1. In case of Participatory capital, a copy of the trust deed.
2. Copies of audited accounts for the last 5 completed years or a shorted
3. A Memorandum and Articles of Association
1. Brief history of the company since incorporation giving details of its
2. Copy of Agreements of other documents relating to arrangements with
3. 9. Certified copies of agreement with Managing Agent, Selling Agent,
4. A statement containing Particulars of material contracts.
5. Certified copies of Agreement with BSB, BSRS, ICB and any other
6. Form 2 as printed in the listing regulations.
7. A deed of Unconditional Undertaking to abide by the listing regulations of the DSE.
5. Activities including any re-organization, changes in its capital structure
6. And borrowings.
8. Or between Vendors, Promoters, Underwriters, Brokers.
9. Managing Director and Technical Director.
10. Financial institutions
Membership Section
Nobody can participate in the stock trading without being a member of stock exchange. There
are two types of member-
a) Dealer: They can act as principal any buy for their own accounts and sell securities from
their own inventories.
b) Broker: They act as agents of others and receive a commission from their clients. They
have no rights to buy or sell from their own inventories.

67
The same firm or individual member may act as either a broker or a dealer at different times
and in different transactions in the secondary market
Application for Membership
As per company resolution, to get the membership in DSE, it is necessary to form a limited
company and one director will have to be selected as the representative for dealing with the stock
exchange. An application to be submitted as per “Form-Ka’ along with the following
documents:-
1. Memorandum of Association, Articles of Association of the company.
2. Tax clearance certificate.
3. Letter regarding permission for on-line trading.
4. Deed of Declaration as per clause 5 (b) of General Rules and regulations of DSE.
5. Two copies stamp size recent photograph.

68
3.7 Securities and Exchange Commission (SEC):
The Securities and Exchange Commission (SEC) was established on 8th June, 1993 under The
chairman and members of the Commission are appointed by the government and have overall
responsibility to administer securities legislation. the Securities and Exchange omission Act,
1993. The commission is a statutory body and attached to the Ministry of Finance.
Securities and Exchange Commission of Bangladesh
Jiban Bima Tower (15 and 16 Floor)
10, Dilkusha Commercial Area,
Dhaka-1000, Bangladesh
Tel : 880-2-9568101 Fax : 880-2-9563721
Email: secbd@bdmail.net
SEC Regulates
 Dhaka Stock Exchange Ltd. (DSE)
 Chittagong Stock Exchange Ltd. (CSE)
 Central Depository Bangladesh Limited (CDBL)
 Credit Rating Information and Services Ltd (CRISL)
 Credit Rating Agency Bangladesh Limited (CRAB)
Responsibilities of SEC:
According to section 8 of the Securities and Exchange Commission Act, 1993 the responsibilities of SEC
are:
· Prohibiting fraudulent and unfair trade practices relating to securities markets.
· Promoting investors education and training of intermediaries of securities market.
· Prohibiting insider trading insecurities.
· Regulating business in stock exchange and any other securities markets.
· Registering and regulating the work of stock brokers, sub-brokers, share transfer agents,
bankers to an issue, trustee of trust deeds, register to an issue, merchant bankers, underwriters,
portfolio managers, investment advisors and any other intermediaries who may be associated
with securities market in any manner.

69
· Registering, controlling and regulating the work of collective investment schemes including
mutual funds.
· Promoting, regulating and controlling self regulatory organizations.
· Regulating substantial shares acquisition and company take over.
· Undertaking inspection, conducting inquiries and auditing the stock exchanges, intermediaries
and self regulatory organizations in the securities market.
· Levying fees or other charge for carrying out the activities described above.
· Conducting research for the above activities and declaring data and information.
Securities and Exchange Commission Regulatory Framework:
· Securities and Exchange Commission (Mutual Fund) Regulation 1997
· Securities and Exchange commission (Control of Insider Trading) Regulation 1995
· Securities and Exchange Rules 1987
· Capital Issues (Continuance of Control) Act 1947
· Securities and Exchange Ordinance 1969
· Securities and Exchange Commission Act 1993
· Securities and Exchange Commission (Stock Broker, Stock Dealer and Authorized
Representative) Regulation 1994
· Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Regulation
1996
· Credit Rating Rules 1996
· Public Issue Rules 1998
· Right Issue Rules 1998
Functions of SEC

70
 Regulating the business of stock exchange securities market
 Registering and regulating the business of stock-brokers, sub-brokers, share transfer
agent, bankers and managers to an issue, underwriters, portfolio managers, investment
advisers and other intermediaries in the securities market
 Registering, regulating and monitoring of collective investment schemes including all
forms of mutual funds
 Prohibiting fraudulent and unfair trading practices securities or any securities market
 Promoting investors education and training of all intermediaries of securities market
 Prohibiting insider trading in securities
 Regulating substantial acquisition of shares or stocks and take-over of companies
 Compiling, analyzing and publishing indices on the financial performance of any issuer
securities
 Conducting research and publishing information for the above purpose
Departments of SEC
 Administration & Finance
 Capital Market Regulatory Reform & Compliance
 Corporate Finance
 Enforcement of CDS
 Capital Issues Department (IPO Etc.)
 Legal Services
 Management Information System (MIS)
 Office of the Chairman
 Registration
 Research & Development (R&D)
 Supervision & Regulation of Market and Intermediaries
 Surveillance
 Securities Related Laws, Rules &Regulations
 Securities and Exchange Ordinance, 1969
 Securities and Exchange Commission Act 1993
 Securities and Exchange Rules 1987
 SEC (Prohibition of Insider Trading) Regulation 1994
 SEC (Appeal) Regulation 1996
 Credit Rating Company Rules, 1996
 SEC (Merchant Banker & Portfolio Manager) Rules 1996
 SEC (Stock-dealer, Stock-broker & Authorized Representative) Rules2000
 SEC (Mutual Fund) Rules 1998
 Right Issue Rules, 1998
 Public Issue Rules, 1998
 Depository Act, 1999
 Margin Rules, 1999
 SEC (Market Making) Rules, 2000
 SEC (Acquisition and Takeover of Substantial Shares), Rules 2000
 Depository Regulation, 2000

71
3.8 Central Depository Bangladesh Limited (CDBL)
Central Depository Bangladesh Limited (CDBL) was incorporated as a public limited company
on 20th August 2000 to operate and maintain the Central Depository System (CDS) of Electronic
Book Entry, recording and maintaining securities accounts and registering transfer of securities;
changing the ownership without an physical movement or endorsement of certificates and
execution of transfer instruments, as well as various other investor services including facilitation
of the secondary market trading of Treasury Bills and Government Bonds issued by the
Bangladesh Bank.
Central Depository Bangladesh Limited (CDBL), a joint venture company setup by banks, stock
exchange, Asian Development Bank and other institutions operates the Central Depository
System (CDS) in Bangladesh.
CDBL, by converting physical certificates into electronic form, will eliminate the risks of
damaged, lost, forged and duplicate share certificates. The instantaneous delivery through
electronic book entry will result in immediate transfer of ownership, which presently can take
over a month. CDBL, in the long term, will also reduce the costs of the investing public.
3.9 Supply of and Demand for Financial Products:
Payment and transaction products:
Bangladesh Bank has taken several initiatives such as formation of the National Payment System
Council (NPSC) and establishment of the Bangladesh Automated Cheque Processing System
(BACPS) and Bangladesh Electronic Fund Transfer Network (BEFTN), along with creating
necessary legal and regulatory frameworks to enhance the efficiency of the payment and
transaction system. Moreover, increasing adoption of modern and technology driven payment
system will cater to meeting the payment requirements of the increasingly complex financial
transactions of the Bangladesh economy.
Savings products:
The banks currently offer 14 different types of savings products for their clients Interest rates on
fixed deposits for 2-3 years were increased by all types of banks in different magnitudes during
the quarter under review. The share of urban deposits increased from around 80 percent at the
end of December 2001 to nearly 87 percent at the end of March 2007. The deposit-GDP ratio
was 29.6 percent in 1990, which grew to 44 percent at the end of December 2006 and declined to
39.5 percent at the end of March 2007.

72
Loan products:
The rise in credit disbursement of scheduled banks is mainly driven by growth in advances.
During the period under review, quarterly growth rate of advances for agricultural purposes
depicted a declining trend. However, working capital financing followed a fluctuating trend.
Specialized loan products—term lending:
In view of the relatively low but rising share of the industrial sector in GDP, ensuring adequate
flow of term lending is important for Bangladesh. Total disbursement of industrial term lending
in FY08 was dominated by PCBs and stood at Tk. 201.5 billion as against Tk. 123.8 billion in
FY07 showing a robust growth of 62.8 percent. Infrastructure financing, on the other hand,
covers a wide range of activities including financing of different industrial establishments,
construction, and transport and communication related activities. Total outstanding credit to the
above broad spectrum of infrastructure activities increased significantly during the last three
years indicating rising demand for investment in such activities.
Access to finance by small and medium enterprises:
In the FY09 budget, the SME sector has been treated as a thrust sector with focus on deepening
the activities of this sector along with ensuring their sustainability. BB has arranged refinancing
facilities for banks and NBFIs. Since the beginning of the refinancing schemes, Tk.10.19 billion
were refinanced to 18 banks and 21 NBFIs till the end of December 2008. For boosting the
development of the SME sector, new generation of financial institutions are needed along with
financing mechanisms to provide access to appropriate finance and meet up the diversified needs
of financial services of this potential sector.
Micro Credit Operations:
Micro credit operations of large microfinance institutions (MFIs) show an overall satisfactory trend in
terms of disbursement and recovery of loans. During the first half of FY09, total loan disbursement
increased by 34.4 percent over the same period of FY08, much higher than the growth during the
comparable period of FY08 and the average growth over the last few years.

Here are the key points about capital market:- A capital market is a financial market where long-term debt or equity-backed securities are bought and sold.- In the capital market, businesses and governments can raise long-term funds to support their operations or future growth. They do this by selling securities like stocks and bonds to investors. - The main goal of the capital market is to mobilize long-term savings in the economy and channel them into productive long-term investments that will help the economy grow.- There are two main components of a capital market - the primary market and the secondary market. In the primary market, new stock and bond issues are sold to investors. In the secondary market

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

More from Ariful Saimon

More from Ariful Saimon (20)

Recently uploaded

Recently uploaded (20)