Report On Financial Market in Bangladesh

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Report On Financial Market in Bangladesh

1. Financial market:

Financial market which consist of a number of institution and market serving business firms, individuals and government.

The Purpose of Financial market:

Financial assets exist in an economy because the saving of various individuals, corporations and governments during a period of time differ from their investment in real assets. By real assets we mean such things as houses, buildings, equipment, inventories and durable goods.

A financial asset is created only when the investment of an economic unit in real assets exceeds its saving, and it finances this excess by borrowing and issuing stock. Of course, another economic unit must be willing to lend. In the economy as a whole saving surplus units (those whose savings exceed their investment in real assets) provide funds to saving deficit units (those whose investment in real assets exceed their saving). This exchange of funds is evidenced by investment instruments or securities, representing financial assets to the holders and financial liabilities to the issuers.

The purpose of financial markets in an economy is to allocate savings efficiently to ultimate users. If those economic units that saved were the same as those that engaged in capital formation, an economy could prosper without financial markets.

Classification of Financial Market:

  • Money Market:

The market for short term (less than one year original maturity) government and corporate debt securities. It also includes government securities originally issued with maturities of more than one year but that now have a year or less until maturity.

  • Capital Market;

The market for relatively long-term (greater than one year original maturity) financial instruments (e.g. bonds and stocks).

  • Primary Market:

A market where new securities are bought and sold for the first time (a “new issues” market).

  • Secondary Market:

A market for existing (used) securities rather new issues.

2. Money market:

The market for short term (less than one year original maturity) government and corporate debt securities. It also includes government securities originally issued with maturities of more than one year but that now have a year or less until maturity.

For example: Insurance company,

3. Capital Market:

The market for relatively long-term (greater than one year original maturity) financial instruments (e.g. bonds and stocks).

The long term market is called capital markets and consists of securities having maturities greater than one year. The most common corporate securities in this category are bonds, common stock, preferred stock and convertible securities. These securities are found on the firms balance sheet under the designation long terms liabilities and equities taken together. These long term securities comprise the firm’s capital structure.


Dhaka Stock Exchange:

Dhaka Stock Exchange is the major earliest stock exchange of Bangladesh situated at the main area of the Dhaka, 28th April 1954, DSE was formed. A members council is manage and operate function of DSE.

Legal Control:

The Dhaka Stock Exchange (DSE) is registered as a Public Limited Company and its activities are regulated by its Articles of Association rules & regulations and bye-laws along with the Securities and Exchange Ordinance, 1969, Companies Act 1994 & Securities & Exchange Commission Act, 1993.

Functions of DSE:

The Major functions are-

  • 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.

DSE the Clearing and Settlement process:

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, settled and removed from the Settlement Pool. It consists of three major business processes.

Clearing: participant trade reporting, affirmation, billing and 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 bySEC 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”.

Here is a complete picture of the settlement system for all of our 378 Instruments in Five (5) groups in the Four (4) markets.

A Group: Number of Instruments are 164 (142 + 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” are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading Software.

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

B Group: Number of Instruments are 18 (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” are 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” are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

N Group: Number of Instrument is 14 (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” are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

Z Group: Number of Instruments are 97(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” are 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.

DES Automated Trading System:


<href=”#prem>? Preamble


<href=”#tesafunc>? TESA Functional Model


<href=”#hard>? Hardware


<href=”#tptf>? TESA’s principal trading functions


<href=”#net>? Network (LAN / WAN)


<href=”#mkt>? Markets


<href=”#syssoft>? System Software


<href=”#tradS>? Trading Sessions


<href=”#app>? Application Software


<href=”#mcon>? Market Control


<href=”#tesa>? TESA Architecture


<href=”#minfo>? Market Information


<href=”#solB>? Solution Benefits


<href=”#bsup>? Broker Support


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.In other words, the trading floor moved right into the member’s office premises where an investor started to place buy/sell orders.

Considering market growth the Automated Trading System was upgraded two times. The recently Upgraded Trading System, started from 30th March, 2008 is capable to handle 1,00,000 trades per day as well as 3000 Trading work stations.


DSE Automated Trading System (HP NonStop S7804) is running on fault tolerant, high available, scalable and maintainable Mainframe Server. Previously DSE established the TANDEM NonStop K204 System on September 1998 and on August 2005 it was replaced with highly scaleable HP NonStop S7802.

DSE upgraded the Trading System once again on 30th March 2008. The existing HP NonStop S7804 Server is highly fault tolerant to the fact that no single component failure will halt the system. Its constituent parts are hot swappable, and upward compatible; components can be added or removed while the system is running and any compatible new upgraded will work with the system. All disk drives are mirrored so, if any of the disk crashes the exact copy of the data is available at online. Moreover the connecting path for every disk whether it is primary or mirror is also redundant. In every case, minimum two peripheral devices exist. All the components are working active – active load balancing procedure . To ensure better power quality we have ensured high end UPS’s with long durable backup capability, two instant backup generations and other electrical devices.


All the Member (230 members) Server Applications (MSA) are connected with NonStop HP S-Series Server through either DSE LAN or WAN connectivity. Each member has one or more Trader Work Station (TWS). The TWSs are being connected to the Trading Server via respective MSA through LAN and WAN connection.

DSE outsourced MetroNet Ltd., DNS Ltd. , X-Net Ltd., Dhaka Com Ltd., Ranks ITT, Link-3, Royal Green Online Ltd. etc Network Service Providers (NSP under WAN Expansion Project. Now a days members can establish a main office or branch offices to their remote location and can trade smoothly by using different media ADSL, Optical fiber and Radio Link from Dhaka and other important cities such as Gazipur, Narayanganj, Comilla, Hobiganj, Chittagong, Sylhet, Khulna, Barisal, Rajshahi, Bogra at the same time.

Two DSE branch offices located at Chittagong and Sylhet is connected via BTTB’s DDN link. We also used another connectivity for redundancy for the DDN link. We have a plan to reach the DSE branches in same way.

DSE LAN/WAN Expansion DSE LAN/WAN Expansion

With in Dhaka City: Outside of Dhaka City:

In case of trade interruption due to serious hardware, software, network failure or telecommunication disruption at the Brokerage houses, there is a provision to allow traders to trade at DSE Contingency Trading floor.


The system software is HP Proprietary NonStop KERNEL and includes the database as part of the operating system thereby eliminating the layer typically found in most Database Management Systems (DBMS). The Database functionalities are handled by NONSTOP SQL, which is simply a different operational session for the operating system. The proprietary nature of the system software arguably enhances system security. Operating system is HP’s proprietary NonStop Kernel DBMS handled by NonStop SQL. The system software treats all its hardware resources as objects and is thus entirely message driven. This then allows application software to be deployed using client / server architecture providing shared data processing between the central server and the user workstation. The central trading system resides in the Stock Exchange premises, which is running 24 hrs in a day & 365 days in a year.


The application, which runs in DSE for trading, is called TESA (The Electronic Securities Architecture). TESA has two parts: MSA (Member’s Server Application) & TWS (Trader workstation). MSA is the “Gateway” between the traders and the Stock Exchange, which manages all the transactions and database operations between the traders and the Trading Engine. TWS is the Front-end Application closer to investors, where they can submit Buy/Sell orders for their desired securities.


TESA software is built for the global securities markets. It uses fault tolerant computers, intelligent workstations and client / server design techniques. This provides co-operative processing, high message integrity, continuous operation and fully automatic recovery. This co-operative mechanism enables very high speed processing which is essential for today’s electronic markets. TESA’s Application Programmatic Interface (API) is the gateway to the TESA system from the outside world. All external devices connect through the API. The API provides the translation between external devices and internal processes. This means that a new process does not need to be written to support each new device, only the API needs to be modified.


The TESA application suite derives significant advantages from being implemented on the HP NonStop platform. The HP NonStop customers have benefited from these advantages.

Fault Tolerance: One of the most important automation requirements for any stock exchange system is continuous system availability. With most systems Fault Tolerance is created at the application level. Fault Tolerance is a fundamental design feature of the HP NonStop architecture.

Data Integrity: Data integrity is an integral feature of HP architecture. TESA employs standard HP tools to achieve exceptional data integrity.

Scalability: The ability of an exchange to accommodate extraordinary increases in transaction volumes without loss of its Capital investment in automation is very important. The HP NonStop Server is massively scalable due to Parallel processors.


An overview of the TESA Functional Model

Client / Server: TESA’s Client / Server architecture enables an efficient allocation of computing resources and provides easily modified user-friendly interfaces. TESA workstations operate under Windows 95 and can function either as servers on a broker’s network or as workstation. These are used to perform trading and settlement activity by the brokers.<href=”#top>


Market Information: Supplying all market information needed to formulate the buy and sell decisions.

Order Management: Accept, validate and store orders and quotes from broker workstations and / or systems.

Order Execution: Automatically executes orders when buy and sell prices match.

Trade Reporting: Trade execution reports are provided to each trade participant, to the settlement system and / or the depository and to the market.

Index Calculation: Calculates and publishes market indices (DSE General Index & Weighted Average Index.)

Market Access: Provide exchange members with efficient affordable GUI-based tools for accessing the market.


Four types of market at DSE

Public Market: In this market instruments are traded in normal volume

Spot Market: Instruments are traded in normal volumes under corporate action if any

Odd lot Market: Odd lots of all Instruments are trade in this market

Block Market: Instruments are traded in bulk volume


TESA conducts trading in-5-phases.

Enquiry: In this session Brokers can logon to the system. No order will be submitted in this session. No trade will be executed. Only previous orders can be withdrawn in this session

Opening: The Opening is a pure, single-price auction. All buy and all sell orders are compared and calculate the open-adjust price. No trades will be executed in this session

Continuous Trading: During this phase, participants enter orders and immediate execution or for inclusion in the book. Automatic matching and execution takes place based on best price/ first in, first out trading rules.

Closing: Closing prices are calculated and disseminated to market participants

Enquiry: Market will be closed in this session & other facilities like the previous enquiry session.


The Market Control Workstation allows the exchange administrative staff to control the operation of the market, e.g.

Session Control: Opening and closing the market via interactive control or by preset timers.

Validation Parameters: Setting and viewing parameters that control the trading engine validation e.g. tick size, Circuit Breaker, Circuit Filter, Market lot, Price protection Percentage.

Messaging: Allows the dissemination of company announcement data and general market administrative massages.


Market Information is a real-time market data system. It collects, manages, generates and stores information relating to trade instruments and issuing companies. Market Information is responsible for,

Collecting Real-Time Market Information: Bids, offers, last sale (i.e. most recent trade price and volume), book and other data are gathered via the Trading engine. It supports TESA’s automated and manual trading modules and can process the trades of external and off-market systems.

Collecting company Information: All information supplied by the listed companies are maintained in the TESA database.

Generating Market Statistics: TESA generates market indices on a real time basis. It generates other statistical information such as Price.


Research and Enquiry: this module provides brokers access to the local Broker Support and TESA databases for enquiries and research purposes.

Public Order Book

Broker Order Book

The multi-windows environment allows users to simultaneously view orders, market and trades. Broker Support offers Stock Exchange members two configurations; standalone and multi-user. Both configurations maintain a database consisting of information generated by the TESA Server and the local system.

Statistical Graphs of DSE: Main Board as on – July 2008

Main Board as on July 2008
Total Number of Listed Securities 391
Total Number of Companies 271
Total Number of Mutual Funds 15
Total Number of Debentures 8
Total Number of Treasury Bonds 96
Total Number of Corporate Bonds 1
In mn
Total Number of Shares, Mutual Fund Certificates & Debentures of All Listed Securities* 2,406
Total Number of Shares of All Listed Companies 2,200
Total Number of Certificates of All Listed Mutual Funds 200
In ‘000
Total Number of Debentures of All Listed Debentures 409
Total Number of All Listed Gov. T-Bonds 2,007
Total Number of All Listed Corporate Bonds 3,000
Tk mn US$ mn
Total Issued Capitalof All Listed Securities 322,027 4,699.76
Total Issued Capital of All Companies Shares 115,369 1,684
Total Issued Capital of All Mutual Funds 1,866 27
Total Issued Debentures 140 2
Total Issued Gov. T-Bonds 201,653 2,943
Total Issued Capital of Corporate Bonds 3,000 44
Total Market Capitalisation of All Listed Securities 970,388 14,162
Total Market Capitalisation of All Companies Shares 756,814 11,045
Total Market Capitalisation of All Mutual Funds 8,587 125
Total Market Capitalisation of All Debentures 576 8
Total Market Capitalisation of all Gov. T-Bonds 201,653 2,943
Total Market Capitalisation of all Corporate Bonds 2,759 40
Conversion rate: 68.52 Tk
* Total No.of Shares/Share Capital / Market Capital includes Bonus /Right of shares.

DSE Monthly Statistics-July 2008

DSE Monthly Statistics – July 2008







in points



Change in %







DSE All Share Price Index

(as of 31st July)

2369.03 2588.03 (8.46) (219.00) 1,936.83 22.31 2,602.83 2,369.03
General Index (as of 31st July) 2761.05 3000.50 (7.98) (239.45) 2,384.18 15.81 3,029.24 2,761.05
DSE 20 (as of 31st July) 2526.24 2545.17 (0.74) (18.93) 2192.29 15.23 2,666.76 2,526.24
Total Turnover Value (Tk mn) 65,068.15 69,954.92 (6.99) 42,698.69 52.39 4,061.24 1,309.26
Total Turnover Value (US$ mn) 949.62 1020.79 (6.97) 623.25 52.37
Total Turnover Volume (in `000) 443,826 449,805 (1.33) 348,055 27.52 24,930 9,822
Market Capitalisation (Tk bn) 955.79 931.03 2.66 541.51 76.50 981.13 942.56
Market Capitalisation (US$ bn) 13.95 13.59 2.68 7.90 76.57
Daily Average Turnover (Tk mn) 2957.64 3179.77 (6.99) 1940.85 52.39
Exponential Moving Average (as of 31st July)
General Index 2833.99 3025.01 (6.31) 2369.67 19.59
DS 20 2594.09 2533.13 2.41 2155.30 20.36
DSE All Share Price Index 2451.64 2588.34 (5.28) 1925.78 27.31
Relative Strength Index (as of 31st July)
General Index 25.47 36.88 (30.93) 68.08 (62.58)
DS 20 34.49 49.39 (30.17) 75.60 (54.38)
DSE All Share Price Index 22.23 42.63 (47.86) 67.49 (67.07)
Market P/E (x) (as of 31st July) 19.78 22.80 (13.25) 18.95 4.38
Yield as of 31st July 2.12 1.94 9.28 2.54 (16.54)
Trading Days 22 22 22
1US$ = 68.52 68.53 68.51 Tk

Sectoral Performance – July 2008

DSE Sectoral Performance – July 2008
Sector Market Capitalisation in mn % of total

Market Cap

Turnover Tk. in mn % of total


July June July June
Financial Sector
Banks 392,215.12 416,404.03 51.06 18,579.77 26,527.26 28.55
Insurance 42,521.39 51,920.89 5.54 5688.47 8073.38 8.74
Investment 19,537.96 28,274.18 2.54 4510.90 6186.55 6.93
Total 454,274.47 496,599.10 59.14 28,779.15 40,787.19 44.23
Foods 18,126.20 12,888.11 2.36 2143.09 1480.93 3.29
Pharmaceuticals 77,547.41 84,943.64 10.10 15447.65 9132.64 23.74
Textile 15,380.42 14,434.13 2.00 1509.06 1246.00 2.32
Engineering 19,541.74 19,635.38 2.54 2474.80 3976.08 3.80
Ceramics 1,051.57 1,002.57 0.14 75.09 63.62 0.12
Tannery 11,422.84 10,642.71 1.49 3246.08 1818.02 4.99
Paper & Printing 469.85 526.29 0.06 0.65 1.39 0.00
Jute 247.54 245.63 0.03 0.37 0.60 0.00
Cement 42,814.09 41,168.94 5.57 1941.21 1933.76 2.98
Total 186,601.65 185,487.40 24.29 26,838.00 19,653.03 41.25
Service & Miscellaneous
Fuel & Power 91,343.17 73,102.66 11.89 3,889.84 4,680.92 5.98
Service & Real Estate 7,289.47 6,979.15 0.95 968.76 1,240.80 1.49
IT 3,464.73 3,421.83 0.45 1,113.40 1,452.42 1.71
Miscellaneous 22,427.57 20,304.18 2.92 3,341.47 1,911.20 5.14
Total 124,524.93 103,807.82 16.21 9,313.48 9,285.33 14.31
Corporate Bond
IBBL Mudaraba Perpetual Bond 2,758.50 2,927.25 0.36 133.30 229.04 0.20
Total 2,758.50 2,927.25 0.36 133.30 229.04 0.20

Performance of DS 20 – July 2008

Performance of DS20 – July 2008
SL No. Company Mcap

Tk mn

% of



TK mn

% of


1 Islami Bank 23,800.87 3.02 1,130.72 1.74
2 NBL 19,724.44 2.50 718.07 1.10
3 Uttara Finance 2,676.96 0.34 345.76 0.53
4 Prime Bank 16,721.25 2.12 221.17 0.34
5 Southeast Bank 11,415.92 1.45 171.76 0.26
6 Dhaka Bank 8,771.84 1.11 71.93 0.11
7 Bangladesh Lamps 707.84 0.09 22.41 0.03
8 SingerBangladesh 4,196.58 0.53 75.40 0.12
9 BATBC 14,016.00 1.78 1,734.28 2.67
10 AMCL (Pran) 792.00 0.10 138.45 0.21
11 BOCBangladesh 5,120.95 0.65 950.10 1.46
12 Square Textile 6,478.11 0.82 1,120.81 1.72
13 Beximco Pharma 11,736.97 1.49 4,525.31 6.95
14 ACILimited. 8,209.51 1.04 3,688.16 5.67
15 Square Pharma 37,066.25 4.70 3,603.75 5.54
16 Meghna Cement 906.20 0.11 111.57 0.17
17 Apex Tannery 1,444.37 0.18 448.89 0.69
18 Bata Shoe 5,630.69 0.71 807.50 1.24
19 Monno Ceramic 423.23 0.05 5.74 0.01
20 GQ Ball Pen 609.67 0.08 163.95 0.25

Top 20 Companies by P/E – July 2008

Top 20 Companies by P/E – July 2008
SL No Company Name Category PE EPS




1 The Engineers * A 0.12 899.57 25%
2 Azadi Printers * A 0.43 138.24 10%
3 Bangladesh Hotels* A 1.80 6.67 35%
4 M. Hossain Garments Z 1.81 6.36 5%
5 Modern Industries* Z 4.78 6.54 0
6 Peoples Insurance DZ 6.03 118.64 10%
7 Meghna Cement DA 6.12 65.86 30%
8 Bangladesh Services* A 6.62 1.66 10%,5%B
9 Beximco Synthetics DA 6.82 19.09 15%B
10 Himadri * A 6.91 1.14 10%
11 First Lease International A 7.48 49.16 20%B
12 Export Import (Exim) Bank DA 7.60 43.48 25%B
13 Therapeutics Z 7.64 43.05 0
14 Jamuna Bank DA 7.91 31.94 1B:7
15 Sonali Aansh Z 8.44 28.45 0
16 Bangladesh Online DA 8.89 5.96 20%B
17 Delta Spinners A 9.08 19.58 10%
18 Rahim Textile A 9.14 37.56 10%
19 Southeast Bank DA 9.33 42.88 15%, 25%B
20 Dulamia Cotton B 9.65 5.08 5%

Daily Market Data – July 2008

Market Data during July 2008
Date DGEN Change DSI DSE 20 Securities


No. of


Volume of


(Nos. in lac)


(Tk in mn)

Mkt Cap