Hazrat Amanat Shah Securities Ltd.-Human Resource Management Practices of Securities & Exchange Commission in Bangladesh

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Human Resource Management Practices of Securities & Exchange Commission in Bangladesh

1.1. Introduction:

The capital market is the market of securities, where companies and the government can raise long-term funds. The capital market includes the stock and the bond market. The SEC is the capital market watch dog which regulates the capital market operation to ensure is protected against fraudulent activities.

The capital market plays vital role in the industrialization of the required to create employment opportunities for the unemployed people and a strong capital base for the economic modernization to alleviate poverty.

The growth of capital market largely depends on the policy decision of the Government. Capital market is the mechanism to mobilize excess liquidity of the market to form a strong capital base required for rapid industrialization. A vibrant capital market in one of the key players to strengthen the pace and process of industrialization in a developing country like Bangladesh.

1.2. Objective of the study:

· To make an overview of Dhaka Stock Exchange.

· To make an overview of Hazrat Amanat Shah Securities Ltd.

· To identify the various systems of human resource practices by HAS and DSE.

· To investigate the functions, activities & developments of DSE.

1.3. Methodology of the study:

1. In preparing the report published materials, papers and documents of DSE are used. Also consultation in made with personnel belonging to Hazrat Amanat Shah Securities Ltd., Dhaka Stock Exchange Library. Security Exchange commission (SEC). Central Depository Bangladesh Limited. Also materials are obtained from websites

2. Data finding, analysis and interpretation.

1.4. Limitation of the Study:

· It is very difficult to collect all the required information..

· Many personnel of the DSE & Hazrat Amanat Shah Securities Ltd. Reluctant to provide useful information.

· The employees are very much busy with their job. As a result, they provide me a little time consult with them.

· For the reason of confidentiality, some useful information can’t be expressed in this report.

Basic idea of capital market

2.1. Definition of Capital Market:

It is a Platform/Board/Forum, usually recognized by the concerned Regulatory Authority – Security Exchange Commission (SEC) in Bangladesh, Where shares or securities listed with the Stock Exchanges are traded by the general Public through Stock Brokers.

However, where the debentures, debts, bonds, etc are traded that is usually called Bond market. Also, where the business/ventures futures are traded that is classified as Future market.

Identically, where commodities are traded that is called commodities/commodity-wise (named) Market like the Metal market-London, Oil market-Singapore, Gold market-South Africa and Commodities market-Canada.

Unfortunately, no such formal Market like Bond, Future and Commodities has/have yet been introduced/ established in Bangladesh.

2.2. Structure of Capital market:

Financial Markets can be categorized as those dealing with newly issued financial claims into Primary market and Secondary Market.

Primary market: The first portion is primary market where securities issues for raise equity for respective company/organization.

Secondary market : The market for exchange financial claims those previously issued in market and a secondary market is that in the secondary market the issuer of the asset does not receive funds from the buyers Rather the existing issue changes hands in the secondary market and the fund flow from the buyer of the asset to the seller.

Third Market: It is one kind of OTC market where trading of share of listed on an exchange.

Fourth Market: It is a financial market where trading occurs between two parties directly without help of intermediary.

2.3. Capital market Instruments:

1. Bond

a. Bond by Coupon –

I. Fixed rate bond.

II. Floating rate bond.

III. Zero coupon bond.

IV. Inflation indexed bond.

b. Bond by issuer –

I. Corporate bond.

II. Government bond.

III. Municipal bond.

IV. Sovereign bond.

2. Equities (Stocks)

a. Stock

b. Share

c. IPO

d. Short Selling.

3. Investment fund.

a. Mutual Fund.

b. Exchange traded fund (ETF).

c. Close-end fund.

d. Segregated fund.

4. Derivatives

a. Options.

b. Warrants.

c. Futures.

d. Forward.

e. Swaps.

f. Credit derivatives.

g. Hybrid securities.

5. Structured finance.

a. Securitization.

b. Asset backed security.

c. Collateralized debt obligation.

d. Collateralized mortgage obligation.

e. Credit linked note.

f. Unsecured bond.

g. Agency securities.

2.4. Market participant in the stock market:

Sl. Name of the participant Status

01 Members (Broker/Dealer) Market intermediary

02 Securities and Exchange Commission Regulator

03 Clearing House Operator & Settlement

04 Depositor & depository participant Operator

05 Custodian Operator

06 Sub broker Agent

07 Credit rating agency Analyst

08 Financial Institution Intermediary

09 Foreign institutional investor Intermediary

10 Issuers/Register and transfer agent Intermediary

11 Exchange Authority Management Body

12 Investor (Public/Institutional) Market maker.

13 Market Analyst (fundamental/technical) Analyst.

3.1. History of Dhaka Stock Exchange:

The DSE was first incorporated as East Pakistan Stock Exchange Association Limited on April 28, 1954. However formal trading began in 1956 with 196 securities listed on the DSE with a total paid up capital of about Tk. 4 billion. On June 23, 1962 it was renamed as East Pakistan Stock Exchange Limited. After 1971, the trading activities of the stock Exchange remained suppressed until 1976 due to the liberation was and the economic policy pursued by the government. The trading activities resumed in 1976 with only 9 companies listed having a paid up capital of Tk. 137.52 Million on the stock exchange. In May 13, 1964 it was rename as Dacca Stock Exchange and in 1986 was renamed as Dhaka Stock Exchange Limited.

3.2 History of Hazrat Amanat Shah Securities Ltd.:

Hazrat Amanat Shah Securities Ltd. was started its business in capital market from October 22, 2009, its member no. in DSE is 173. Though it is newcomer in the capital business, but it is now one of the leading brokerage houses in Bangladesh. It has now 12 branches all over the country. About 250 employees are serving in the Hazrat Amanat Shah Securities ltd. The head office and branch of HAS is Moon Mansion, 12 Dilkusha, motijheel.

3.3. Major events of DSE:

· Incorporate as East Pakistan Stock Exchange

· Association Ltd – 28 April 1954.

· Starting formal Trading – 1956

· Renamed as East Pakistan Stock Exchange Ltd – 23 June 1964

· Renamed as Dacca Stock Exchange Ltd. – 13 May 1964

· Trading Started in Bangladesh – 16 August 1976

· Starting of DSE all share price index calculation – 16 October 1986

· DSE all share price index calculation

· Started on the basis of IFC design formula – 1 November 1993

· Starting Automated Trading – 10 August 1998

· Starting DSE 20 Index – 1 January 2001

· Starting CDS – 24 January 2004

· Starting Govt. Bond market – 1 January 2005

· DSE all share price index reintroduced – 28 March 2005

· Direct listing regulations 2006 introduced – 12 April 2006.

3.4. Regulatory body & Support Organization:

The Dhaka Stock Exchange is registered as Public Limited Company and its activities are regulated by its Articles of Association and own rules, regulations and by-laws long with the Securities and Exchange Ordinance, 1969 and Companies Act 1994.

1. Regulating and Controlling Organization : The Regulating and Controlling Organization of the Capital market of Bangladesh are as follows –

1. Policy making body:

The Council is responsible for policy making only. It consists of 24 members by Article 74(1) as mentioned below.

– 12 councilors are to be elected from members.

– 12 selected by councilors.

I. One Councilor to be nominated by the Ministry of Finance (Finance Division) and no below the rank and status of Joined Secretary.

II. One Councilor to be nominated by the Bangladesh Securities & Exchange Commission from amongst its officers of or above the rank of general Manager.

III. President of Institute of Chartered Accountants of Bangladesh, ex-officio.

IV. President of FBCCI, ex-offico.

V. President of Metropolitan Chamber of Commerce and Industry, ex-officio.

VI. President of DCCI, ex-officio.

VII. One Councilor to be nominated by the Ministry of Industry and no below the rank and status of Joined Secretary.

VIII. One Councilor to be nominated by the Ministry of Commerce and no below the rank and status of Joined Secretary.

IX. President of Supreme Court Bar Association, ex-officio.

X. Head of Dept. of Finance/Economics, DU, ex-officio.

Support organization: Securities & Exchange Commission

About SEC:

The Securities and Exchange Commission (SEC) was established on 8th June, 1993 under the Securities and Exchange Commission Act, 1993. The Chairman and Members of the Commission are appointed by the government and have overall responsibility to administer securities legislation. The Commission, at present has three full time members, excluding the Chairman. The Commission is a statutory body and attached to the Ministry of Finance.

Missions of SEC:

a) Protect the interests of securities investors.

b) Develop and maintain fair, transparent and efficient securities markets.

c) Ensure proper issuance of securities and compliance with securities laws.

Functions of SEC:

I. Regulating the business of the Stock Exchanges or any other securities market.

II. Registering and regulating the business of stock-brokers, sub-brokers, share transfer agents, merchant Securities & Exchange Commissioners and managers of issues, trustee of trust deeds, registrar of an issue, underwriters, portfolio managers, investment advisers and other intermediaries in the securities market.

III. Registering, monitoring and regulating of collective investment scheme including all forms of mutual funds.

IV. Monitoring and regulating all authorized self regulatory organizations in the securities market.

V. Prohibiting fraudulent and unfair trade practices relating to securities trading in any securities market.

VI. Promoting investors’ education and providing training for intermediaries of the securities market.

VII. Prohibiting insider trading in securities.

VIII. Regulating the substantial acquisition of shares and take-over of companies.

IX. Undertaking investigation and inspection, inquiries and audit of any issuer or dealer of securities, the Stock Exchanges and intermediaries and any self regulatory organization in the securities market

X. Conducting research and publishing information.

2. Support Organization : Central Depository Bangladesh Limited

About CDBL:

Central Depositor 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 Securities & Exchange Commission.

Central Depository Bangladesh Limited (CDBL), a joint venture company setup by Securities & Exchange Commissions, stock exchange, Asian Development Securities & Exchange Commission 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.

Participants of CDBL:

· Stock brokers/dealers (members of the Dhaka and Chittagong Stock Exchanges);

· Securities & Exchange Commissions.

· Financial institutions;

· Insurance companies;

· A statutory organization;

· Merchant Securities & Exchange Commissioners;

· Asset managers;

· Custodians; and

· Other capital market intermediaries registered with the SEC.

Category of CDBL Participants:

a) Trading Participant : May only settle stock exchange trades and cannot maintain accounts on behalf of customers;

b) Full Service Participant: This is a stock exchange member who may hold shares and operate accounts on behalf of customers.

c) Custody Participant : May hold shares and operate accounts on behalf of customers but is not a stock exchange member;

d) Settlement Agent Participant: May settle stock exchange trades on behalf of stock exchange members.

Method of Operation of CDBL:

· The investor opens an account with a participant or CDBL

· Certificates are ‘ dematerialized’ by lodging them at the issuer.

· The issuer updates the register and moves the holding to the depository portion of the register.

· The investor sells on a stock exchange through a stockbroker and another investor buys.

· The stock exchange advises CDBL to update its records.

· CDBL debits the sellers account.

· CDBL credits the buyers account.

· Investors may dematerialize if they wish.

3.5. Functions & Activities of Dhaka Stock Exchange:

(I) Functions of Dhaka Stock Exchange :

· Listing of Companies. (As per Listing Regulations).

· Providing the screen based automated trading of listed Securities.

· Settlement of trading. (As per Settlement of Transaction Regulations)

· Gifting of share / granting approval to the transaction/transfer of share outside the trading system of the exchange (As per Listing Regulations 42)

· Market Administration & Control.

· Market Surveillance.

· Publication of Monthly Review.

· Monitoring the activities of listed companies. (As per Listing Regulations).

· Investor’s grievance Cell (Disposal of complaint bye laws 1997).

· Investors Protection Fund (As per investor protection fund Regulations 1999)

· Announcement of Price sensitive or other information about listed companies through online.

(II) Activities of Dhaka Stock Exchange.

1. Clearing and Settlement :

The Clearing and Settlement module provides the management of trade from the point of entry into the Settlement Pool trade database until it has been delivered and settled and removed from the Settlement Pool. It consists of three major business processes.

Clearing: Participant trade reporting and affirmation, billing, assigning settlement instructions.

Settlement: the process of overseeing that delivery of all instruments to the buyer and payment of all moneys to the seller has occurred before removing the trade from the settlement pool.

Regulation 4 of the Settlement of Stock Exchange Transactions Regulation 1998 has been given effect time to time. A new directive was made by SEC dated on 18th March 2003 “Adjusted due position mechanism for settlement of scrip only as provided by regulation 4(1) of settlement of Stock Exchange Transaction Regulations, 1998 shall remain suspended from 19th March 2003 until further order”.

As per Commission (SEC) decision, dated 5th December 2006, new netting settlement system has been implemented from 10th December 2006. Some of the listed instruments had been placed in non-netting group and others were in netting group. The “day netting” system was continuing for the netting instruments. Non- netting group, which is in compulsory spot market, the transactions are not netted. The transactions are settled by depositing all the shares sold and paying full amount for the shares purchased.

Here is a complete picture of the settlement system for all of our 310 Instruments in Five (5) groups in the four (4) markets.

A Group: Number of Instruments are 145 (123 + 8D + 14M), Here D for Debentures, M for Mutual funds & TB for Treasury Bonds (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility for scrip only through DSE Clearing House on T+1, T+3 basis). “A” and “DA” is marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading Software.

This cycle is valid for A, B, G & N category instruments traded in Public, Block & Odd-lot market

B Group: Number of Instruments are 33 (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). “B” and “DB” is marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

G Group: Number of Instrument is 1 (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). “G” and “DG” is marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

N Group: Number of Instrument is 4 (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). “N” and “DN” is marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

Z Group: Number of Instruments are 93 (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+3, T+7 basis). “Z” and “DZ” is marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

This cycle is valid only for Z group instruments traded in Public, Block & Odd-lot market.

Instruments Of All Groups Traded in Spot Market:

The above cycle is valid for A, B, G, N & Z category instruments traded in spot market.

Instruments Of foreign Trades (DVP) of All Groups:

The above cycle is valid for A, B, G, N & Z category instruments of foreign trade


01) For A group Instruments:

Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade* T+1 & T+3
Spot Trade for Trade T+0 & T+1
Odd + Block Trade for Trade T+1 & T+3

02) For B group Instruments:

Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade* T+1 & T+3
Odd + Block Trade for Trade T+1 & T+3
Spot (Before Book closer) Trade for Trade T+0 & T+1

03) For G group Instruments:

Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade* T+1 & T+3
Odd + Block Trade for Trade T+1 & T+3
Spot (Before Book closer) Trade for Trade T+0 & T+1

04) For N group Instruments:

Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade* T+1 & T+3
Odd + Block Trade for Trade T+1 & T+3
Spot (Before Book closer) Trade for Trade T+0 & T+1

* As netting system for shares has withdrawn, for A, B, G & N group instrument, member will have to deposit the full shares at the DSE on T+1 after selling the shares, In case of purchasing such shares, the buyer will have to deposit the Balanced (Netted) money traded in Public, Block & Odd-lot market at the DSE on T+1.

05) For Z group Instruments

Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade* T+4 & T+7
Odd + Block Trade for Trade T+4 & T+7
Spot (Before Book closer) Trade for Trade T+1

** Under the Trade for trade settlement system, member will have to deposit the full money at the DSE on T+3 after purchasing the shares, In case of selling such shares, the seller will have to deposit the full shares at the DSE on T+3.

3.6. Surveillance at DSE:

The main objective of the Surveillance function of the Exchange is to promote market integrity in two ways—

· By monitoring price and volume movements (volatility) as well as by detecting potential market abuses at a nascent stage, with a view to minimizing the ability of the market participants to influence the price of the scrip in the absence of any meaningful information.

· By managing default risk by taking necessary actions timely.

Market Abuse is a broad term which includes abnormal price/volume movement, artificial transactions, false or misleading impressions, insider trading, etc. In order to detect aberrant behavior/ movement, it is necessary to know the normal market behavior–

The department carries out investigation, if necessary, based on the preliminary examination/analysis and suitable actions are taken against members involved based on the investigation.

All the instruments traded in the market come under the Surveillance umbrella of DSE.

Surveillance activities at the Exchange are divided broadly into two major segments:

· Price Monitoring: Price monitoring is manly related to the price movement/ abnormal fluctuation in prices or volumes etc.

· Position Monitoring: The position monitoring relates mainly to abnormal positions of members, etc. in order to manage default risk.

Price Monitoring

The functioning of the Price Monitoring is broadly divided into following activities–

1. on line Surveillance:

One of the most important tools of the Surveillance is the On-line Real Time Surveillance system with main objectives of detecting potential market abuses at a nascent stage to reduce the ability of the market participants to unduly influence the price and volumes of the scrips traded at the Exchange, improve the risk management system and strengthen the self regulatory mechanism at the Exchange. The system provides facility to access trades and orders of members.

2. Off-Line Surveillance:

The Off-Line Surveillance system comprises of the various reports based on different parameters and scrutiny thereof–

· High/ Low Difference in prices

· % change in prices over a week/ fortnight/ month

· Top N scrips by Turnover over a week/ fortnight/ month

· Top N scrips by Volume over a week/ fortnight/ month

· Trading in infrequently traded scrips

· Scrips hitting New High / Low etc.

The Surveillance actions or investigations are initiated in the scrips identified from the above-stated reports.

3. Investigations:

Conducting in-depth investigations based on preliminary enquiries/analysis made into trading of the scrip. In case of irregularities observed, necessary actions are initiated or investigation case forwarded to SEC, if necessary through the CEO.

Surveillance Actions:

1. Warning to Members: The department may issue verbal/ written warning to member/s when market irregularities in the scrip are suspected.

2. Imposition of penalty/ suspension: The department, through the CEO, imposes penalty or suspend the member/s who are involved in market irregularities, based on the input/ evidence available from investigation report.

3. Rumor verification:

· Liaising with Compliance Officers of companies to obtain comments of the company on various price sensitive corporate news items appearing in selected News Papers.

· Comments received from the companies are disseminated to the market by way of online news bulletin.

· Investigations based on rumor verifications are carried out, if required, to detect cases of suspected insider trading.

Position Monitoring

The Surveillance Department closely monitors outstanding exposure of members on a daily basis. For this purpose, it observes various off-line and on-line market monitoring reports. The reports are scrutinized to ascertain whether there is excessive purchase or sale position build up compared to the normal business of the member, whether there are concentrated purchases or sales, whether the purchases have been made by inactive or financially weak members and even the quality of scrips is considered to assess the quality of exposure.

The following key areas are examined to assess the market risk involved –

1. Online monitoring of Brokers Position: surveillance closely monitors broker’s gross turnover exposure for ensuring margin calls in time.

2. B/S Statement of Trading Members: Scrutinizing the statement on daily basis. It is for keeping a watch on the exposure of the members & ascertains the quality of exposures.

A detailed report on the net outstanding positions of top purchasers and top sellers in individual scrips, is prepared, if considered necessary.

3. Concentrated B/S: It is considered a risky issue. In case, such a situation is noticed, fundamentals of the scrips, their daily turnover, and their nature of transactions are ascertained. Thereafter, based on the market risk perception appropriate surveillance actions are taken.

4. B/S of scrips having thin trading: It is closely scrutinized as comparatively high market risk is involved in trading in such scrips. Details of trades in such scrips, if necessary, are called from members to assess the market risk involved & decide on the appropriate surveillance action.

5. Verification of Institutional Trade: The institutional trades executed by the trading members are verified to ascertain the genuineness of trades.

6. Verification of Foreign Trade: The foreign trades executed by the trading members are verified to ascertain the genuineness of trades.

7. Verification of Cross Reporting Trade: The report crossing trades executed by the trading members are verified to ascertain the genuineness of trades.

8. Verification of Dealers own trades: Trades executed by the trading members (Dealers) are verified to ascertain the genuineness of trades.

9. Verification of Sponsor’s Trade: The Sponsors trades executed by the trading members are verified to ascertain the genuineness of trades.

10 Snap Investigation: To carry out, wherever considered necessary, preliminary investigation of certain dealings to verify irregularities. Further actions, viz., referring the case for detailed investigation, referring the case to the Sec, depending on the findings of preliminary investigation.

11. Market Intelligence: The rumors floating in the market are verified with the data available with DSE, Newspapers, Television news channels & Reuters to ascertain the national & global factors affecting the market sentiments. This enables the Exchange to avert market problems before it causes a serious damage.

12. Review Block Trades:

To determine —

Whether the block was executed at a price, even if at a discount or premium which was in line with other trading of the stock.

Whether there was any news on the company which caused the price increase or decrease subsequent to the block transaction.

13. Review List of Settlement Failures: To identify —

broker/s with frequent failures

a particular stock with a pattern.

14. Verify Company Accounts: To scrutinize company announcements, company reports, auditors qualifications & other notes of special interests in the published accounts of such company

15. Review Media Information: To scrutinize press articles or other media on the daily basis, the news relevant to the share prices of companies.

16. Monitoring on Newly Listed Stock: To review all activities of a newly listed stock for the first 1 / 2 weeks to identify any abnormal deal.

17. Develop Good Liaison: To develop & maintain good liaison with staff members of SEC & listed companies & member firms as well.

18. Develop market contacts & to pick up Intelligence.

3.7. Trade segment of markets :

1. Public market : For general trading of securities.

2. Spot Market : For pre-book closer trading.

3. Odd Lot market : Any transaction for odd lot.

4. Block Market : Block market trannsaction involved trading of Tk. 0.5 milion or above

3.8. Trading sessions:

Trading at DSE is performed through a Non-stop platform in following sessions:

Continuous Trading Hours : 10.00 an to 2.00 pm.

Trading day : Sunday to Thursday.

3.9. Listed companies by industry.

Industry name No. of companies
Securities & Exchange Commission 46
Cement 8
Ceramic 4
Corporate bond 1
Debenture 8
Engineering 23
Food & Allied 35
Fuel & Power 9
Insurance 34
Investment 15
IT 7
Jute 4
Miscellanous 13
Paper & printing 8
Pharmaceuticals & Chemicals 25
Services & real Estate 5
Tennery Industries 8
Textile 39
Treasuay Bond 69

3.10. Criteria of Share category.

“A” Category Companies: Companies which are regular in holding the Annual general meeting and have declared dividend at the rate of 10 percent or more in a calendar year.

“B” Category Companies: Companies which are regular in holding the Annual general meeting but have failed to declare dividend at least at the rate of 10 percent in a calendar year.

“Z” category Companies : Companies which have failed to hold the annual general meeting or failed to declare any dividend or which are not in continuously for more than six months or whose accumulated loss after adjustment of revenue reserve, if any, is negative and exceed its paid up capital.

”G” Category Companies: Green field Companies.

“N” Category companies: All newly listed companies expect Greenfield companies will be placed in this category and their settlement system would be like B-category companies.

3.11. Types of Securities listed in market:

Types of securities Listed
Shares 266
Debenture 8
Corporate Bond 1
Mutual Fund 14
Govt. T-bill 61

3.12. Forms of Market Indicator of DSE: There are few indices in the DSE as follows

Sl. Indicators Arrangement Base
01 DSI All shares 350 (as on 01.11.1993)
02 DGEN A, B, G & N 817.63704 (as on 24.11.2001)
03 DS20 Top 20 share 1000 (as on 01.01.2001)
04 Top 10 Share Top 10 share turnover
05 Top 10 Loser Highest capital loser
06 Top 10 Gainer Highest capital gainers

Index calculation Algorithm (According to IOSCO Method):

Current index: Yesterday’s Closing Index x Current M. Cap / Opening M. Cap

Closing index: Yesterday’s Closing Index x Closing M. Cap / Opening M. Cap

Current M. Cap = ? (LTP x Total no. of indexed shares)

Closing M. Cap = ? (CP x Total no. of indexed shares)

4.1. Market capitalization by year (Tk. In million):

4.2. Sector capitalization by year (in percent):

4.3. Market capitalization of every industry by year (in percent)

4.4. Market turnover projection by year ((Tk. mn)

4.5. Market Index & Indicator.

DSE General index projection by year

DSE 20 index projection

DSE all index projection

5.1. Market Capitalization to GDP.

Market capitalization to GDP Ratio
Financial Year 2003-04 2004-05 2005-06 2006-07 2007-08 (E)
GDP (in percent) 6.27 5.96 6.63 6.51 6.5
Market capitalization to GDP ratio 4.1 5.99 5.18 10.18 15.88

5.2. Portfolio Investments vs Foreign Direct investment..

Portfolio investment Vs. Foreign Direct Investment

Portfolio/FDI 2003-04 2004-05 2005-06 2006-07 2007-08 (oct)
Portfolio (US$ mn) 6 0 32 106 48
FDI (US$ mn) 385 776 743 760 263

5.3. Opportunity for NRB investments to DSE:

The authority has already offered a wide range of facilities and incentives for attracting investment from both foreigners and Non resident of Bangladeshi’s.

Opportunities for foreign investors: Bangladesh has adopted a very liberal industrial policy to attract foreign investment.

· No limitations pertaining to equity participation. I.e. up to 100 percent foreign private investment allowed.

· Greater facility for establishing industry in EPZ.

· Except five reserve sectors, all in industries are open for private investment.

Non-Resident Bangladeshi’s can enjoy the existing facilities: Non-Resident Bangladeshi’s enjoy facilities similar to foreign investors.

· Allowed to buy newly issued shares/debentures of Bangladeshi companies.

· 10 percent reserved quota for NRB in primary shares.

· FC deposits in the NFCD account.

Investment guarantee:

· Foreign private investment (promotion & protection) act 1980 ensures legal protection to foreign investment in Bangladesh against nationalization and expropriation.

· It also guarantees repatriation of capital and dividend and equitable treatment with local investors.

· Adequate protection is available for intellectual property rights such as patents, designs & trademarks and copyrights.

Other facilities and incentives:

· Tax holiday 5-10 years depending on location of industries.

· 15 years tax holiday for private power generation companies.

· Facilities for repatriation of invested capital, profit & dividend.

· Exemption of tax on interest on foreign loan.

· Tax exemption on royalties, technical know-how & technical assistance fees.

· Avoidance of double taxation on the basis of bilateral agreements.

Market analysis from several aspects

Demand and supply of securities.

Securities Demand of the perspective of IPO
Sl. Name of the Company G. Pub share(Tk. Core) Sub. (Tk. Core) Low <1 &High >1
1 Khaza Mosaic Tiles and St. Indus. Ltd 1.00 0.42 0.42 times
2 Keya Detergent Limited 3.60 7.36 2.04
3 Mutual Trust Securities & Exchange Commission Limited 12.50 107.72 8.62
4 Jago Corporation Limited 2.00 2.04 1.02
5 Agni Systems Limited 2.00 15.15 7.58
6 First Lease International Limited 2.00 54.77 27.39
7 Standard Securities & Exchange Commission Limited 11.00 155.56 14.14
8 Daffodils Computers Ltd. 4.50 3.12 0.69
9 JMI-Bangladesh Ltd. 3.00 5.97 1.99
10 Lafarz Surma Cement Ltd. 15.00 38.87 2.59
11 Export-Import (EXIM) Securities & Exchange Commission Limited 40.80 501.12 12.28
12 Mercantile Insurance Limited 9.00 65.61 7.29
13 Pragati Life Insurance Limited 4.50 173.49 38.55
14 Berger Paints Bangladesh Limited 1.16 122.79 105.94
15 Progressive Life Insurance Company Limited 4.50 164.36 36.52
16 Islamic Finance And Investment Limited 10.00 170.80 17.08
17 Sonar Bangla Insurance Limited 9.00 36.06 4.01
18 Summit Power Limited 20.00 239.04 11.95
19 Asia Pacific General Insurance 10.50 13.76 1.31
20 Premier Leasing International Limited 10.05 120.81 12.02
21 Prime Finance & Investment 5.00 115.44 23.09
22 Nitol Insurance Company Limited 9.00 24.72 2.75
23 Meghna Life Insurance CompanyLimited 4.50 70.05 15.57
24 Popular Life Insurance 4.50 54.59 12.13
25 Fareast Islami Life Insurance 4.50 90.10 20.02
26 Peoples Leasing and Financial Services Ltd. 6.36 38.26 6.02
27 Global Insurance Company Limited 9.00 70.42 7.82
28 Agrani Insurance Company Limited 9.00 65.27 7.25
29 Prime Islami Life Insurance Ltd 4.50 141.70 31.49
30 BRAC SECURITIES & EXCHANGE COMMISSION Limited 85.00 417.70 4.91
31 Industrial Promotion and Development Company of Bangladesh Ltd. 13.90 226.19 16.27
32 BD Industrial Finance Company Ltd.: 11.10 159.67 14.39
33 Lanka Bangla Finance Limited 9.00 148.32 16.48
34 Alam Cold Rolled Steels Limited 10.80 44.21 4.09
35 Jamuna Securities & Exchange Commission Limited 38.61 389.65 10.09
36 Continental Insurance 9.00 111.36 12.37
37 Fidelity Assets & Securities Company Limited 14.06 274.29 19.50
38 Mudaraba Perpetual Bond (MPB) of Islami Securities & Exchange Commission Bangladesh Limited. 150.00 324.09 2.16
39 City General Insurance Company Limited 9.00 19.32 2.15
40 Paramount Insurance Company Limited 9.00 29.89 3.32
41 Trust Securities & Exchange Commission Limited 70.00 799.42 11.42
42 Phoenix Finance & Investments Limited 12.50 277.83 22.23
43 Bangladesh Finance & Invest. Co. Ltd. 7.00 217.61 31.09
44 International Leasing and Financial Services Ltd. 11.25 343.23 30.51
45 Union Capital Limited 7.50 298.60 39.81
46 The Premier Securities & Exchange Commission Limited 84.50 537.06 6.36
47 Golden Son Ltd. 6.00 63.99 10.66
48 Shahjalal Islami Securities & Exchange Commission Limited 93.58 402.57 4.30
49 ICB AMCL 1st NRB 10.00 94.46 9.45

Interpretation: Given data table shows company offer IPO to offload shares to public and found feedback as subscription amount high 105 times and average 15 times for every security. And that implies public demanding for quality securities.

P/E ratio by sector.

Sector wise Price Earning Ratio (Weighted Avg.)
Sl. Industry name 2003 2004 2005 2006 2007
1 Securities & Exchange Commission 8.72 21.74 17.90 15.49 24.97
2 Insurance 12.36 26.92 20.87 10.24 15.59
3 Investment 8.84 8.27 6.55 6.13 20.29
4 Food & Allied 10.22 10.11 9.13 18.69 23.28
5 Pharmaceuticals & Chemicals 10.76 18.19 10.84 11.76 21.05
6 Textile 13.65 15.30 19.15 12.01 12.14
7 Engineering 15.22 18.62 14.14 17.34 28.57
8 Ceramic 17.37 25.74 17.06 14.88 29.85
9 Tannery Industries 9.47 10.51 10.28 8.00 15.38
10 Paper & printing 9.28 1.82 4.69 6.62 6.23
11 Jute 12.81 19.56 12.55 6.74 7.98
12 Cement 31.54 25.23 16.13 18.53 12.61
13 Fuel & Power 15.48 14.79 33.52 18.87 35.95
14 Services & real Estate 34.23 9.61 8.16 12.62 8.82
15 IT 10.71 25.11 10.46 11.12 15.25
16 Miscellaneous 10.05 13.21 7.83 11.05 14.43

6.1 Dividend payment performance by industry.

Dividend Performance (Simple Average)
Sl. Industry name 2003 2004 2005 2006 2007
1 Securities & Exchange Commission 3.69 18.84 34.98 35.05 25.82
2 Insurance 18.16 13.60 19.28 18.33 15.42
3 Investment 10.26 13.56 50.39 40.24 41.47
4 Food & Allied 24.21 22.24 20.81 12.44 5.42
5 Pharmaceuticals & Chemicals 18.58 21.12 22.62 25.49 30.64
6 Textile 5.08 5.35 4.76 6.38 7.37
7 Engineering 19.38 18.25 25.31 20.31 20.35
8 Ceramic 7.94 8.22 8.22 8.43 8.33
9 Tannery Industries 16.66 20.10 23.65 7.54 39.57
10 Paper & printing 0.31 7.50 9.00 2.57
11 Jute 2.61 2.17