An overview of the capital market of bangladesh.

1. Capital Market
of Bangladesh
Presented By: 1995, 1996, 2000, 2001

2. TABLE OF CONTENTS
Chapter 1 What is Capital Market?
Chapter 2 Importance of Capital Market in Bangladesh.
Chapter 3 Challenges in the Capital Market in Bangladesh.
Chapter 4 How to Improve the Situation in Capital Market.

3. Chapter 1: What Is Capital Market?
Capital Markets are financial markets that bring buyers and
sellers in one place to trade stocks, bonds, currencies and other
financial assets. The general markets are: Stock Market and
Bond Market.

4. ● Where savings and investments are
channeled between buyers and suppliers.
● Suppliers: Banks and Investors.
Who seeks the capital: Businesses,
Governments and Individuals.
● Primary Market: Where new equity stock
and bond issues are sold to the investors.
Secondary Market: Where securities are
traded.
● Allows a smooth flow of money between
those who want to invest and those who
need it.

5. Primary Market
The “First Time” Market. This is where new securities, stocks and
bonds are sold publicly by a company. Thus it is called the
“New Issue Market”. In this case, the company who issues it, has
to convince the investors about the value of the new security.
Secondary Market
This is where the actual trading happens between investors. This is
a venue where previously issued securities are exchanged. This is
a pure buyer-seller market. Secondary market doesn’t involve the
issuing company as they are a part of the primary market.

6. Primary Market Secondary Market
● Where new securities are issued
by companies.
● Mostly for the large investors with
the capacity as they can buy
more at once.
● Investors need to be convinced
about the securities by the
investment bankers about the
safety and value of the security.
● Trading of previously issued
securities between investors.
● The Stock Exchanges are a major
and important example of
secondary market and of Capital
Market in general.
● A better market for small time
investors as they benefit from the
auctions and dealer markets.

7. 1. Economic growth
2. Capital raising platform
3. Wealth creation and enhanced savings
4. Diversification of investments
5. Market transparency and corporate
governance
6. Employment opportunities and
industrial growth
7. Financial inclusion and access to
capital
8. Government revenue generation
Chapter 2: Importance of
Capital Market

8. There are two types of
stock exchanges in
Bangladesh:
1. Dhaka Stock
Exchange (DSE)
1. Chittagong Stock
Exchange (CSE)
STOCK
EXCHANGES
OF
BANGLADESH

9. Launching of the Bangladesh Automated Trading System (BATS) in 2019,
which enhanced the trading and settlement process of the stock exchanges,
helped to increase market transparency and efficiency and replaced the
traditional open outcry method of trading with electronic trading, making the
market more efficient, transparent, and accessible.
Additionally, the Bangladesh Securities and Exchange Commission (BSEC),
the regulatory authority for the capital market, has implemented several
measures to improve investor protection and confidence. The Bangladesh
Securities and Exchange Commission (BSEC) has also been working to
improve market regulations and introduce new initiatives to attract both local
and foreign investors.
Recent Important Developments

10. The Bangladesh capital market has shown significant growth in
recent years, with the benchmark index DSEX reaching an all-time
high in 2020. The market has experienced substantial liquidity and
investor participation, with the stock turnover reaching a record
high in 2019.
Covid-19 and its effect on capital market:
The market experienced a significant drop in 2020 due to the COVID-19
pandemic and its impact on the global economy. However, the market has
shown resilience and has recovered to some extent in the following months.
The government has also taken several steps to improve the market,
including the introduction of a new securities law in 2020 that aims to protect
investors' interests.

11. Chapter 3: Challenges in the
Capital Market in Bangladesh
Challenges in the capital market in
Bangladesh include-
1. Volatility and Uncertainty
2. Liquidity Issues and Risks
3. Market Manipulation
4. Market Access and Inclusivity

12. Volatility and Uncertainty
Need Cause Consequence
● Effective
regulatory
frameworks
and
transparent
flow of
information.
● International
cooperation
and systemic
risk
assessment.
● Create
challenges
for investors,
market
participants
● Higher
probability
of a
declining
market
● Frequent
fluctuations
in the prices
of the assets
● Geopolitical
events
● Market
sentiment
● Interest rate
hikes
● Political
instability
● Global
events like a
pandemic or
war

13. Liquidity Issues and Risks
● Improved
market
depth.
● Enhanced
Liquidity
provision.
● Controllable
associated
risks.
● Distinct lack
of buyers for
a particular
liquid asset
● Fail to meet
debt
obligations
● Insufficient
liquidity in
the capital
market
● Less liquid
securities
● Company
cannot meet
its short term
liabilities
● Challenging
for investors
to execute
trades at
desired
prices
● Amplified
price
movements
● Increased
market
volatility.
Need Cause Consequence

14. Market Manipulation
● Enhanced
market
surveillance.
● Cooperation
among
regulators
and
exchanges.
● Whistleblowe
r protection
and
enhanced
disciplinary
actions.
● Unethical
practices
● Price
manipulation
● Insider
trading
● Front running
● Spreading
false or
misleading
information
● Distort
market
prices
● Undermine
the integrity
of the market
● Increased
regulatory
scrutiny
● Significant
financial
penalties
Need Cause Consequence

15. Market Access and Inclusivity
Consequence
● Ensuring
equal access
to capital
markets
Need
● High
transaction
costs
● Complex
investment
products
● Limited
financial
literacy
● Discriminatio
n in
accessibility
of capital
markets
Cause

16. Chapter 4: How to Improve the Situation
in Capital Market.
Strengthen Regulatory Framework Improve Corporate Governance
Increase Market Liquidity Strengthen Market Infrastructure
Promote Market Diversification Encourage Long-Term
Investments
Strengthen Investor Protection

17. Strengthen Regulatory Framework
Improve Corporate Governance
Continuously enhance the regulatory framework to:
1. Ensure effective oversight, transparency and investor protection.
2. Imply stricter enforcement of regulations
3. Promote corporate governance practices
4 Address issues like insider trading and market manipulation
1. Encourage listed companies to adopt and comply with robust
corporate governance practices.
2.Ensuring transparency in financial reporting.
3. Disclosing relevant information to the market.
4. Establishing independent boards of directors.

18. Increase Market Liquidity
Strengthen Market Infrastructure
1. Implement measures to enhance market liquidity and
trading volumes.
2. Attract more domestic and foreign institutional investors.
3. Encourage market makers
4. Improving the market structure to facilitate ease of
trading.
1. Invest in improving market infrastructure and
technological capabilities.
2. Upgrade trading platforms and settlement
systems.
3. Enhance market efficiency and accessibility by
upgrading information dissemination
mechanisms.

19. Promote Market Diversification
Encourage Long-Term Investments
Encourage a diverse range of securities and financial instruments
in the capital market, such as derivatives and exchange-traded funds.
This can provide investors with more investments options and help
deepen the market.
Promote a culture of long-term investment by introducing measures
that incentivize investors to hold securities for longer durations.
This can reduce short-term speculation and enhance stability
in the market.

20. Strengthen Investor Protection
1. Enhance mechanisms for investor protection including
quick and efficient dispute resolution processes.
2. Establish investor compensation funds to safeguard
investors against financial losses due to fraudulent
practices or market failures.
Implementing these measures requires collaboration among regulatory authorities, market
participants, and other stakeholders to foster a transparent, well-regulated, and vibrant
capital market in Bangladesh.

21. THANK YOU!