Stock Markets in Bangladesh

I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
The primary market is where capital is actually raised by the
company selling stock to investors. Company in a separate arena from
the stock market performs the capital raising function. The stock
exchange is a trading vehicle place where buyers and sellers are
brought together. All profits and losses go directly to the investors, less
commissions and fees. The stock market is structured t provide
liquidity and marketability to the securities industry. It is a worldwide
system designed to bring buyers and sellers together. Company
owners and stockholders, whether part of management, venture
capitalists or investors, need a way of turning their stock certificates
back into cash. The stock market provides this opportunity. It is this
kind of liquidity that makes investing in stocks attractive. Stock prices
are set by supply and demand. It is an auction market, where
investors, through their intermediaries-brokers bid for stock at a price
they feel is fair at the time. The market provides a ready market for
stocks. With a simple phone call, an investor can buy or sell stock,
virtually in minutes.
A nationwide user-friendly
central depository system (CDS)
has also been brought into. At
CSEs taking the first stem,
securities and exchange
commissions of Bangladesh has
formed a committee to develop
an appropriate legal framework
for the central depository
system. Considering the
important role of CSE on the
development of capital market of
Bangladesh, an attempt has been
fabricated in this paper to study
the simultaneous practices of
stock trading in Chittagong by
CSE. Although various research
worker had been fabricated
about various topics of CSE, a
very few have been taken to
analyze the overall operational
accomplishment and the
profitability of Chittagong stock
exchange (CSE).
The stock exchange is a
secondary market, trading
market. And
Chittagong
Stock
Exchange.
A S HOR T NOT E ON S T OC K MA R KE T
1
The stock market is an essential part of capital market. The economy
of a country largely relies on a strong capital market supported by a
vibrant stock market. Contribution of any stock exchange generally
leads to the economic growth by stimulating the funds to finance
industry and other enterprises and changing the savings to industries
and other productive activities. The existence of a stock market
facilitates listed companies to raise additional capital quickly and
cheaply as they enjoy reputation. Bangladesh emerged as an
independent country in the year 1971. But till now, the industrial
development of Bangladesh is still insolvent and for swift
industrialization, formation of capital is the most significant
component. But it is easy to procure through capital market with
proper support of stock market. Bangladesh stock market has seen a
rapid growth in the recent years. Initial public offerings (IPO) are
increasing and foreigners are also increasingly showing interest
responding to the governmental policies and development in the stock
exchanges. At present, their are two stock exchanges, in both the
exchanges, trading is done through automation system- a new
technologically developed system for stock trading. By introducing this
system, both the exchanges increased their role in the overall
development of capital market or the country. The Chittagong stock
exchange (CSE) has been established in 1995 as model of international
standard. A complete automation project of CSE is on full sway.
Md.Yousuf Chowdhury
The Chittagong Stock Exchange (CSE)
began its journey in 10th October of
1995 from Chittagong City through the
cry-out trading system with the
promise to create a state-of-the art
bourse in the country.
Founder members of the proposed Chittagong
Stock Exchange approached the Bangladesh
Government in January 1995 and obtained the
permission of the Securities and Exchange
Commission on February 12, 1995 for
establishing the country's second stock
exchange.
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. CSE was formally opened by then
Hon'ble Prime Minister of Bangladesh on
November 4, 1995.
The mission of the CSE is to create on
effective, efficient and transparent
market of international standard to save
and invest in Bangladesh in order to
facilitate the competent entrepreneur to
raise capital and accelerate industrial
growth for overall benefit of the
economy.
The Chittagong Stock Exchange believes
that a dynamic, automated, transparent
stock exchange is needed in Bangladesh.
It works towards an effective, efficient
and transparent market of international
standard to serve and invest in
Bangladesh in order to facilitate the
competent entrepreneurs to raise capital
and accelerate industrial growth for
overall benefit of the economy and keep
pace with the global advancements.

Missions
Chittagong
Stock
Exchange.
ABOUT CSE
Background
Vision:
The visions of CSE are as follows:
a) To develop a strong platform for raising capital
b) To provide an investment opportunities for the investor
c) To develop a corporate culture through mandatory corporate membership
d) To develop a transparent market ensuring investors interest
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Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
e) To expand the capital market
f) To collect, preserve and disseminate data and information on stock market
g) To provide a fully automated trading, clearing and settlement system to ensure quick,
easy, accurate and easily accessible to all transactions
h) To make interest about Bangladesh stock market for the non-resident Bangladeshis to
invest in this market
i) To develop a research sell for analyzing status of the market and economy
j) To attract the investors for getting membership of SEC
k) To ensure smooth customer service and truncation
l) To achieve goodwill
m) Total necessary steps for increasing customers.
3
Objectives
- 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
Md.Yousuf Chowdhury
BOARDS OF DIRECTORS
Legal base of CSE
As legal entity CSE is a not-for-profit public
limited company. All of its 129 members are
corporate bodies. It has a separate secretariat
independent of policymaking Board. The
Board comprises of brokers and non-brokers
directors with equal proportion to ensure the
transparency.
The Board constituted Committees to delegate
such functions and authority as it may deem
fit. There is an independent secretariat headed
by a full time Chief Executive Officer. CSE
activities are regulated by its own regulations
and bye laws along with the rules, orders and
notification of the SEC.
Chittagong
Stock
Exchange.
4
Sl. No. Name of the Directors Designation Elected/non
-elected
1 Mr. MKM Mohiuddin President Elected
2 Mr. Nasiruddin Ahmed Chowdhury Vice -President Elected
3 Mr. Fakhor Uddin Ali Ahmed Vice -President Elected
4 Mr. A.Q.I. Chowdhury, OBE Vice -President Elected
5 Mr. Abu Sayed Md. Shahidullah Director Elected
6 Mr. Al Maruf Khan Director Elected
7 Mr. A.S.M. Nayeem Director Elected
8 Mr. Bijon Chakroborty Director Elected
9 Mr. M. Salman Ispahani Director Elected
10 Mr. Murshed Murad Ibrahim Director Elected
11 Mr. Syed Mahmudul Huq Director Elected
12 Mr. Tareq Kamal Director Elected
13 Dr. A. Majeed Khan Director Non-Elected
14 Prof. Abu Ahmed Director Non-Elected
15 Engr. Ali Ahmed Director Non-Elected
16 Mr. Amir Humayun Mahmud Chowdhury Director Non-Elected
17 Mr. Anis A. Khan Director Non-Elected
18 Mr. Farooq Sobhan Director Non-Elected
19 Mr. Mamun Rashid Director Non-Elected
20 Mr. Md. Sarwar- E- Alam Director Non-Elected
21 Prof. Rabiul Husain Director Non-Elected
22 Mr. Mohd. Safwan Choudhury Director Non-Elected
23 Mr. Waliur Rahman Bhuiyan Director Non-Elected
24 Mrs. Yasmeen Murshed Director Non-Elected
25 Mr. A.B.Siddique Director Ex-officio
Md.Yousuf Chowdhury
The CSE Board of Directors is
comprised of a maximum of 25
members, of whom the General
Body of the Exchange elects 12
and Securities and Exchange
Commission nominates 12. The
Board elects its own President
and 3 Vice- Presidents. The
Chief Executive Officer of CSE
is an ex-officio member of the
Board
The core responsibility of the
Board is to frame the CSE
policies and supervise the
Exchange's operations:
MANAGEMENT TEAM
Chief Executive Officer: 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.
Functional department
Corporate department Market operations Compliance department
System department
Finance department
R & D
departme
nt
Clearing and
settlement
Membership
Listing
Inspection
Surveillanc
e
Chittagong
Stock
Exchange.
5
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
COR P OR AT E DE PA R T ME NT
6
Md.Yousuf Chowdhury
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
To fulfill the need, CSE has been publishing a monthly
bulletin named market update since from its very
beginning. From November 1997 this monthly bulletin
was replaced by its upgraded version under a new title
Portfolio. Portfolio is publishing regularly with
increasingly better content, sharp analysis and greater
quality. In the year 2000 CSE decided to publish
Poprtfokio quarterly instead of monthly. Another
monthly publication is newsletter in Bengali.
These library contains international newspapers,
journals, stock market related books, publications,
listed companies information, CD-rom, video cassettes,
annual report of different stock exchange and of
course, different course related books of different
categories. The library has been steadily expanding
with accession of more books and periodicals, although
its user has not been increasing.
The CSE market transaction data are regularly updated
in every 2 hours on this web site, which includes the
current issues of the Portfolio. CSE also update its web
site time to time, especially when any change took
place.
Research, Corporate Development &
Information:
Chittagong
Stock
Exchange.
Portfolio:
Library:
Web site:
CL EARI NG & S ETTL EMENT
7
Research and publications are essential
pre-requisites for effective functioning
and development of any stock
exchange.
CSE has developed and maintaining a
specialized and well furnished library
for the use of the members, brokers,
dealers, executives as well as students
to fertilize the education know-how.
CSE has an excellent and attractive
web-site containing CSE history, rules
and regulation, information regarding
trade, listed companies, financial
information and so on, for the net
browsers.
Md.Yousuf Chowdhury
Selling broker Buying broker
T+3
Clearing house of CSE
Cheques in favor of
selling
broker
Cheques in favor CSE
Securities
Securities
CSE CLEARING HOUSE
CSE provide settlement and clearing services for members through
the Clearing House. The Clearing House provides the members
and the CDBL each members settlement obligations i.e. what
counter parties owe and what counter parties are due to receive on
the settlement date after the trading period is over. It acts as a
common agent between members by delivering and receiving their
securities and cheques. The Clearing House also handles failed
trade, bad delivery, auction settlement etc.
CENTRAL DEPOSITORIES OF BANGLADESH
LIMITED (CDBL)
The Central Depositories of Bangladesh
Limited (CDBL), the only depositories in
Bangladesh provides facilities for the
settlement of transactions of dematerialized
securities in CSE.
Chittagong
Stock
Exchange.
Clearing, Settlement & DP: This department is responsible for:
CLEARING ORGANIZATION
CSE SETTLEMENT SYSTEM
TRANSFER OF SECURITIES
8
- Delivering cheques and shares to members
- File and withdraw stock from vault
- Deal with bad delivery procedures
- Manage security receive shares from members
- Opening of BO accounts and provide other depository
services
Figure: Settlement procedure at a glance
Md.Yousuf Chowdhury
The selling members deliver the
securities to the Clearing House on the
pay-in day in case of physical
settlement and make available the
required securities in the clearing
accounts maintained with CDBL in case of
dematerialized securities. Members are
required to open clearing accounts with
depository participants of CDBL.
The Clearing House delivers the
securities certificates to the buying
members on the pay-out day and CDBL
credit the required securities to the
buying members clearing account in case
of dematerialized securities if there is
no receivable money pending.
Settlement of transaction of
foreign buyer and/or seller
involving a custodial bank
is done directly between the
members through the
custodial bank with
intimation to the clearing
house.
Chittagong
Stock
Exchange.
SPECIAL SETTLEMENT REQUIREMENTS FOR
FOREIGN INVESTOR INVOLVING
CUSTODIAN BANK
FAILED TRADES:
If a member fails to deliver securities or make payment on the settlement day, the stock exchange
automatically auctioned the unsettled transaction on the risk and account of the defaulting member.
No prior notice is given. The defaulting member is not allowed to carry out trading from the day
after settlement day until payment of the outstanding money and a fine as decided by CSE.
The Clearing House receives cheques from the buying member on the pay in day and the selling member received
cheques from the Clearing House on the pay-out day if there are no receivable securities pending.
CATEGORY WISE SETTLEMENT SYSTEM AND SETTLEMENT CYCLE
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Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
Pay and pay out day for Spot order transactions of all categories of companies are T+0 and T+1 respectively.
Direct settlement of foreign buyer and/seller shall be within T+5 and intimation thereof to CSE within T+6
[Notes: T stands for Trading day;]
MARKET OPERATI ON
10
Categor
y
Criteria Settlement System Settlement Cycle
A Mutual Fund, Regular AGM, Declared and
paid at least 10% dividend within sixty days
from the date of declaration and Submission
of compliance re thereof to SEC within seven
working days from the date completion of
disbursement
Netting for payment obligation and
trade for trade for securities
obligation
Pay in day = T+1
Pay out day = T+3
B Regular AGM, Declared and paid Dividend
less than 10% and Submission of the
compliance Report to SEC within the time
limit
Trade for Trade for both securities
& money obligation
Pay in day = T+ 1
Pay out day=T+3
G Greenfield companies Trade for Trade for both securities
& money obligation
Pay in day = T+ 1
Pay out day=T+3
N All newly listed companies except Greenfield
companies
& money obligation
Pay in day = T+ 1
Pay out day=T+3
Z Irregular AGM or Declared no dividend at all
or declared dividend but failed to pay it off or
Submission of the requisite compliance report
to SEC within the time limit or Not in
operation for six months, or Accumulated loss
after adjustment of reserve, if any, is negative
and exceeded its paid-up capital excluding
those who declared dividend.
& money obligation
Pay in day = T+3
Pay out day = T+7
Md.Yousuf Chowdhury
- Monitor public information
- Monitor, receive and disseminate regular company
information
- On-line surveillance
- Inspection visits to members
- Receive and disseminate price sensitive company
information
- Receive and manage investor complaints
- Receive and manage other complaints
- Manage and monitor OTC facilities
In terms of the matching process, there are
two methods:
1. Orders are sorted and matched with
opposite orders of the best price. Waiting
orders are automatically in the following
sequence keeping the system fair and
transparent:
1 Best Price
1 Within Price, by time priority.
The best buy order will match with the best
sell order. The best buy order for a seller is
the one with highest price and the best sell
order for a buyer is the one with lowest
price. An order may match partially with
another order resulting in multiple trades.
2. Orders are queued for matching at a
specified time at a single price.
Subsequent to matching, trade confirmations
are sent to the respective workstations, which
can be printed on-line. The system displays
scrip and market-related information required
to support traders.
TRADING ORDERS
CSE trading system provides immense flexibility to the investors in
terms of kinds of orders that can be placed to trade. The system allows
the user to modify or cancel an order prior to execution.
The most frequently order on the CSE is the "limit order, which is an
order to buy or sell at a specific price. Conditions related to time can be
easily made into a limit order, which are as follows
A GTC order is the order that remains in the system
for a period not exceeding one calendar week or the
member cancels it.
A GFD is the order, which is valid for the day on
which it is entered. If the order is not matched during
the day, the order gets cancelled automatically at the
end of the trading day.
A GTD order allows the member to specify the
number of days not exceeding one calendar week for
which the order shall stay in the stay in the system.
At the end of this period the order shall be deleted
from the system.
GOOD
TILL
CANCELLED
(GTC):
GOOD
FOR
DAY (GFD):
GOOD
TILL
DATE (GTD):
Chittagong
Stock
Exchange.
This department carries out the following functions:
TRADING SYSTEM
The Chittagong Stock Exchange was the first stock exchange in the country to
introduce automated trading system on June 1999. The trading system at CSE known
as CHITTRA connected major cities of Bangladesh enabling all members to trade nation
wide simultaneously with ease and efficiency.
Order Matching Mechanism
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Md.Yousuf Chowdhury
Market order
1
Drip Feed Order
2
Stop Loss Order
3
Match at Closing Price Order
4
Spot Order
5
Odd Lot Order
6
Bulk lot order
7
Big Lot Order
8
Auction Order
9
Chittagong
Stock
Exchange.
In addition to limit order, the Exchange
has introduced other following types of
orders for the investors:
Market Order is an order to buy or sell a certain quantity of
particular security at the best price or prices prevailing in the
market at that point of time.
A Drip Feed Order is an order in which the member has the option
to specify a replenish quantity along with the total order quantity.
A Stop Loss Order allows the member to place an order, which
gets activated only when the market price of the relevant security
reaches or crosses trigger price. A stop loss order can be modified
or deleted until it is not converted to a limit order.

A Match at Closing Price Order allows the Member to specify
order to be executed at Closing Price.
Members shall be allowed to carry out spot order on CSE system
arising out of closure of book or closure of the renunciation period
of listed Companies. A spot order is traded against another spot
order only.
Any share quantity, which is not a market lot or multiple of
market lots, shall be called Odd Lot. While matching the system
would match orders only if the quantity (odd) of the order is fully
satisfied by one of the opposite order.
Bulk lot orders are multiple of market lot orders, which contain
multiple numbers of certificates. Each of the Bulk lot order shall
match with equal quantity and best price. The minimum amount
for a bid of bulk lot for a certain security shall be Tk 0.5 (point
five) million at market price unless otherwise fixed by the Board
time to time with the approval of the SEC.
Big lots are multiple of market lots inscribed in one single
certificate. Each of the big lot order shall match with equal
quantity and equal or better price.
Auction Order shall be an order entered by CSE. The Exchange
will specify a rate with price brand for each security when putting
the auction order. The auction orders entered by CSE cannot be
modified or deleted once the auction session has started.
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Md.Yousuf Chowdhury
The trade takes place from Monday to
Friday except holidays declared in
advance by the Exchange.
The market timings of normal trading
session are:
The opening price of a
security shall be the price at
which maximum number of
securities is matched in
opening session.
Computation of closing price of scripts
The closing prices of scripts are computed on the basis of
weighted average price of all trades in the last 30 minutes
of the continuous trading session. However, if there is no
trade during the last 30 minutes, the weighted average
price of maximum 50 (fifty) number of trades preceding
the above 30(thirty) minutes shall be taken for
determination of closing price. In case there is no trade in
the security during the continuous trading session the
opening price of the security shall be treated as the closing
price.
Guidelines:
The following standard upward and
downward price limits are applicable
for A B G & N category
companies for each market days
However the above price limit will not be applicable in the following cases:
= There is no price limit for Z category companies. Free trade of Z category is allowed for each
market day. However, for Z category shares Circuit Filter @10% is applicable and the circuit filter is
calculated on the basis of last traded price of the shares of this category during trading hours
= A newly listed securities is allowed for free trade for first 5(five) consecutive market days.
= Free trade is also allowed on the subsequent trading day of receiving price sensitive information
like rights issue, bonus issue and dividend from the listed company. After the day, the price limit will
be applicable as usually.
= Free trade is allowed on the first trading day subsequent to the record date from 12.00 noon to
the rest of the trading hours of the day due to closure of transaction resulting from record date/book
closure date.
Chittagong
Stock
Exchange.
TRADI NG HOURS
Market Open: 09:40 hours
Market Closed: 14:30 hours
The system will also have sessions for Odd Lot, Spot and Auction sessions. These sessions however may take place simultaneously
with the normal trading sessions or in a separate session after closing of normal trading session
OPENING & CLOSING PRICE CALCULATION
Previous days per share market price Limits
01. Up to Tk. 200 20% (Twenty Percent ) but not exceeding Tk.35
02. Tk.201 to Tk.500 17.5% (Seventeen Point Five Percent ) but not exceeding
Tk.75
03. Tk.501 to Tk. 1000 15% (Fifteen Percent ) but not exceeding Tk.125
04. Tk.1001 to Tk. 2000 12.5% (Twelve Point Five Percent ) but not exceeding Tk.200
05. Tk.2001 to Tk.5000 10% (Ten Percent ) but not exceeding Tk.375
06. Tk.5001 and above 7.5% (Seven Point Five Percent ) but not exceeding Tk.600
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Md.Yousuf Chowdhury
The CSE put in place a comprehensive risk management
system, which is constantly monitored to pre-empt any
trading failures. It collects margins from members to
address the problems related to the volatile trading activities
as well as to settlement failure.
CSE imposes margin requirements on the members
additional trade exposure. Additional trade exposure means
the amount of the aggregate (gross) trade exposure
exceeding the free limit for each member. Aggregate (gross)
trade exposure is computed on the total buys and total sales
position of a member at any point of time during a trading
day. The free limit on the amount of the gross trade
exposure to trade in CSE is taka one crore per trading day.
The member shall pay the margins in cash, bank guarantee
or FDRs etc. within one hour of exceeding the free limit on
the amount of the gross trade exposure. As per Chittagong
Stock Exchange (Members Margin) Regulations, 2000 the
rate of depositing the members margin with the clearing
house on the additional trade exposure are as follows:-
Exposure limit violation
The trading right of the members who exceeds the free limit
without depositing margin to CSE within the prescribed time
shall remain suspended.
Adjustment or refund of members margin:-
The Exchange can realizes the value of the margin instruments
and adjusts the amount so realized if member fails to settle his
trade with the clearing house on the settlement day.
The member shall be liable to pay the shortfall, if any,
including the costs, interest, charges and expenses involved in
the realization process, within three days of the written notice
of demand issued to him by the Exchange.
Chittagong
Stock
Exchange.
MARGI N REQUI REMENT WI TH CSE
14
ADDITIONAL TRADE EXPOSURE MEMBERS
M
A
R
G
I
N

R
A
T
E
(a
)
Above taka one crore but not
exceeding taka two crore
@ 20%
(
b
)
Above taka two crore but not
exceeding taka three crore
@30%
(c
)
Above taka three crore but not
exceeding five crore
@50%
(
d
)
Above taka five crore @100
%
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
TRANS ACTI ON BY CLI NT ON MARGI N
A member may provide broker service to its client on cash account and /or margin account basis. Client
who pays in full for the cost of the securities purchased uses cash accounts. Margin is buying securities on
credit while using those same or other securities as collateral for the loan. A client is authorized to borrow
part of an investments total purchase cost from their brokerage firm using margin accounts. Brokers have
policies and procedures to protect themselves from market risk, as well as credit risk. As per Margin Rules,
1999 the member in no way extends credit facilities to its client until and unless the client maintains margin
account with the broker through a written agreement. The client needs to carefully review the margin
agreement provided by broker. The client shall deposit margin not later than seven days from the first date
of securities transaction in the form of cash, securities issued by the Government or its agencies, margin
able securities etc. The amount of the initial margin would result in the equity being not less than 150% of
the debit balance in the account. Additional margin is required to be deposited if the account falls below
150% of the debit balance. The failure to do so may cause the broker to force the sale of or liquidate the
securities in the clients account in order to bring the accounts equity back up to the required level.
Your Risks Involved With Trading on Margin
As a client you may generally use margin to expand your
purchasing power. However it also run the risk there are a
number of risks that all investors need to consider in
deciding to trade securities on margin.
These risks include the following:
1. You can lose more funds than you deposit in the margin
account: A decline in the value of securities that are
purchased on margin may require you to provide additional
funds to the broker that has made the loan to avoid the
forced sale of those securities or other securities in your
account.
2. The broker can sale of securities in your account: The
broker can sell the securities in your account to cover the
margin deficiency. You will also be responsible for any
short fall in the account after such a sale.
3. The broker can sell your securities without contacting
you: Some investors mistakenly believe that a broker must
contact them for a margin call to be valid. As a matter of
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Md.Yousuf Chowdhury
How do we benefit you?
1. Automatic credit: All your purchases will be credited to your
Account with just instruction. Added to this all the corporate action
like bonus shares, shares under scheme of spilt, amalgamation, etc.,
will be credited to your account automatically.
2. Off market settlement: We carry out settlement of trades not done
on the stock exchanges (off-market trades).
3. Arrange Dematerialization & Rematerlization: We arrange to
convert the paper form of share certificates into electronic form
through the process of dematerialization and convert the shares held
in electronic form into paper form i.e. Share Certificate(s) through
the process of rematerialization.
4. Transaction Statement: This monthly summary statement will
show opening balance, securities pending for Demat, transfers made
by you, credits received by you, quantity pledged or lent by you and
the closing balance for each security with appropriate description.
5. Amendments to your profile
In case there is any change to the your personal profile like change
of bank A/c or change of address etc we will intimate all the company
in your portfolio regarding the change.
Given hereunder is a quick glance of the various milestones achieved by CSE as a
Depository Participant.
FEES
As mentioned this is a value addition to our client. Hence
we have kept the cost very nominal. At the same time
maintaining our high standard of quality services that is
synonymous with our name.
Chittagong
Stock
Exchange.
good customer relations, most brokers will attempt to
notify their client but they are not required to do so.
4. You are not entitled to an extension of time to deposit
the margin: An extension of time to meet initial or
additional margin requirements may not be available to
you.
Please learn about the risks involved in trading securities on margin, and you should consult your brokers regarding any
matters they may have with your margin accounts.
DP SERVICE
CSE has opened Central Depository
Bangladesh Ltd. (CDBL). now it is
one of the Depository Participant (DP)
of CDBL to give more Value Added
Service for most esteems investors who
holds security in electronic form i.e.
YOU. Customer Services has always
been the prime focus and CSE attends
to the needs of the clients well on time.
ACCOUNT OPENNING
Similar to the brokers, who trade on your
behalf in and outside the stock exchanges,
a depository participant is your
representative (agent) in the depository
system CDBL. The process of opening an
account with us is similar to the opening
of a bank account. You require to sign an
agreement with us which will set out the
rights and duties of the both you and the
Exchange. Just like a bank branch, we will
maintain your securities account balances
and intimate to you the status of your
holdings from time to time. We will
dispatch the statement of holdings to you
periodically; however the statement of
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Md.Yousuf Chowdhury
INTERNET TRADING SERVICES
CSE is not only the pioneer of establishment of nationwide trading mechanism. It also extended its network
to the abroad by introducing Internet Trading System on 30th May 2004. You may have access to our
trading network not only from the premises of our brokers but also from personal computers in your home
through the Internet.
Internet trading is available on CSE. The CSE network allows its user to use internet as an order routing
system for communicating clients orders to the CHITTRA through brokers. Broker can provide this service
to their client after obtaining permission from respective stock exchanges. CSE has stipulated the
minimum conditions to be fulfilled by brokers to start Internet based trading services.
Agreement with a Broker:
As an individual investor you need to open an
account with a broker. When you are willing to use
Internet Trading Facilities, you will need to fill in a
special ITS Account Opening Form. The Terms and
Conditions to be followed by you and your broker for
ITS, will be little different from the regular trading
account. All the Brokers are not eligible for ITS.
Please see in the relevant section of this website or
email to us for a list of brokers who can offer you
ITS. Although the form is available on the net, you
still need to fill in and submit to the chosen broker a
hard copy of the form duly filled in.
Passwords
When you open an account, your broker will prepare
your electronic file. Your profile will be accessible
by you only. Your Login Id and Password are those
that you provided in your Registration Form. We
strongly recommend you to change your password
immediately and from time to time for better security.
And remember the password when you change it.DO
NOT DISCLOSE YOUR PASSWORD TO
ANYBODY. Remember, if you give your password
willingly or unwillingly, he or she can place order
and nobody but yourself will be liable for all those
transaction.
Deposits with your brokers and your trade limit
Make sure that you and your Broker have signed the
Safe Keeping Agreement. Once you have the Safe
keeping agreement, you can deposit shares and
money to your Broker. According to your deposit, the
Broker will set limit of your trade. You may either
have a Cash Account or a Margin Account. Consult
your broker before you choose.

Cash Account and Margin Account
If you have a CASH account, brokers may set limit to the extent
you deposit. For Margin account the Margin Rules 1999 will be
applicable.
Placing your order
Your orders placed through this system, if passes the validation
test will be forwarded to the CSE Trading engine. In the trading
engine, orders are matched on price and time priority. ITS is not
accepting any market order. All submitted orders have to be
limit order
Execution of Trade
Once you place order in the CSE Trading Engine, it will be
queued to be matched with another opposite order according to
the Chittagong Stock Exchange Trading Regulations 1998
Trade Confirmation
When your order is matched with another order, i.e., trade is
executed, you will receive a confirmation note on e-mail. The
email will be generated by the computerised system and will not
require any signature.
Post Trade Settlement
Your Broker will receive a consolidated report from the
Exchange of your buy and sell at the end of business. It is the
responsibility of the Broker to settle for you.
Check your position - your own index
The ITS is not only a system to check market and place order.
You will also be able to see current value of your stock. CSE
ITS will give you opportunity to have your Personal Index.
Collection of money and share certificates from your brokers
Safe Keeping service of your Brokers
Your Broker is bound to make settlement to you by delivery of
good securities and/or payment by cheque "good for payment "
within one day of its receipt of securities and/or cheque from the
Clearing House. You may keep a provision in your Safe Keeping
Service Agreement for the arrangement of the share and money
collected by your Broker.
Chittagong
Stock
Exchange.
holdings can be sent to you as and when
requested for a fee.
Chittagong Stock Exchange
The introductory offer prices are as follows
Account Opening Charges 250/= Inclusive of Tk.100 as adjustable amount
Custodial Charges .06% (60 paisa in per thousand taka), minimum Tk.3.50
Demat Charges .0004 ( 40 paisa in per thousand taka), minimum Tk.7.00 and
transportation charge Tk.30/=
Remat Charges .15 ( 15 paisa in per share), minimum Tk. 110/=
Transaction Charges(Buy & sell) .0004 (40 paisa in per thousand Taka), minimum Tk. 7.00
Annual Maintenance Nil
Statement of Accounts Free of cost
Billing Cycle End of month
Closure Fee AC Closing fee Tk. 50/=
1. Fees schedule are based on existing CDBL charges and may be changed at our discretion.
2. Additional statement will be charged Tk. 10/- per statement.
3. Service tax and other levies would be extra as applicable.
We intent to make your investment as easy as possible & simple too.
:: Procedure for Internet Trading ::
17
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
INTERNET TRADING REGISTERATION FORM:
USER REGISTRATION
All the fields are compulsory except those marked as optional
BROWSING DETAILS
Login Name
(maximum 8 characters)
Browsing Password
(must be 8 characters)
Re-enter Browsing Password

Legal Status
in case of company fill the company details below
The personal details are to be filled only if the legal status of the investor is NRB / Individual
PERSONAL DETAILS
First Name

Middle Name (optional)

Last Name (optional)

Gender
Female Male
Date of Birth
/ / as dd/mon/year (eg.12 Jan 1980)
Occupation

COMPANY DETAILS
18
Md.Yousuf Chowdhury
Register
Chittagong
Stock
Exchange.
Company Name

Date of registration
/ / as dd/mon/year (eg. 12 Jan 1980)
COMMUNICATION DETAILS
Address1

Address2 (optional)

Country

Post Code

Telephone No
(STD code - Telephone No)
Mobile Phone No (optional)

Email Id

Mobile Email Id (optional)

DEPOSITORY ACCOUNT / BROKER DETAILS
DP Id (optional)

BO Id (optional)

Broker Code / Sub-Broker Code
/ Broker / Sub-Broker LookUp
FINANCIAL DETAILS
Name of the Bank

Bank Branch Name

Bank Account No

TIN No

19
Md.Yousuf Chowdhury
The value of the CSE share is BDT 3.00
million. An
individual/company/corporation, if he/it
becomes the member of the Exchange
and fulfill the eligibility criteria, he/it
will have to pay Tk. 50,00,000/- (Tk.
Fifty Lacs) as value of share, Premium
and Entrance fee as :
- Vale of Share : Tk. 3,00,000.00
- Premium : Tk.40,00,000.00
- Entrance fee : Tk. 7,00,000.00
The eligibility criteria for the membership are presented below:
A corporate body with a minimum paid up capital of BDT 2.5 million
Any partner or director thereof as the case may be is/has not
Less than twenty-one years of age;
Bankrupt;
Person of unsound mind;
Person convicted by a competent court of an offence involving moral
turpitude.
Found at any time by SEC or any stock exchange or court involved in any
misconduct in respect stock exchange transaction/market
OVER-THE COUNTER
A new phase for the listing facility in the Capital Market. OTC is designed for two segments of companies
The companies who are delisted from trading
1 Growth companies who are preparing for coming to the stock exchange.
CSE established Over the Counter facilities with a specific facilitate small & medium innovative and high growth
enterprises, in raising resources efficiently through the capital market.
Chittagong
Stock
Exchange.
COMPL I ANCE DEPARTMENT
M E M B E R S H I P
ELIGIBILITY
Membership of CSE
facilitates a person
prospects to become
trading members (stock
brokers) of the Exchange
through compliance of the
regulatory provisions of
CSE and SEC. There are
129 members in CSE all of
whom are corporate
bodies.
Individual may apply and receive membership on condition that they form a corporate body within a specified time,
usually 6 months from the date of the allotment letters issued to them.
BE A CSE MEMBER
20
Md.Yousuf Chowdhury
Tk. 10, 00,000.00 (Ten Lacs) should be paid along with the
application as earnest money.
Balance amount of Tk. 40, 00,000.00 (Forty Lacs) should be
paid within 15 days (Fifteen days) from the date of allotment of
the membership.
Failure to pay the full amount within the specified time will
result in cancellation of allotment of the share and no notice will
be required for this cancellation and the amount of Tk.10 (Ten
lacs) paid with the application will be REFUNDED in full
without interest within 4 (Four) weeks from the end of 30
(Thirty) days of allotment.
All payment should be made by Demand Draft/Pay Order
payable only to Chittagong Stock Exchange Limited.
In case the application is not accepted, the deposit of Tk. 10,
00,000.00 (Ten Lacs) will be REFUNDED without any interest
by the Exchange within four weeks from the day of such
decision of refusal.
The CSE membership is transferable
subject to the approval of the Board.
However a fees of Tk. 2, 50,000.00/- is
to be paid to the Exchange.
Admission to membership of the
Exchange is currently open and
available.
Broker and Dealers shall be eligible to trade in CSE when it:
Becomes a members of the CSE;
Becomes members of the CSE Clearing House;
Open a Clearing Account with a Depository Participant of
CDBL;
Obtains a Brokerage/ Dealership license from the Securities
and Exchange Commission;
Is not otherwise barred by CSE or SEC
The CSE brokers/dealers are required to comply with various
requirements for continuing membership. These include:
Submission of:
= Audited Annual Accounts within four months of the end of the
financial year;
= Monthly Net Capital balance Report;
= Shareholding pattern by-yearly;
= Any changes in respect of management, structural or legal status
of Stock dealers/ stock brokers should be informed to the
Commission within 15 (fifteen) days through stock exchange;
= Compliance Authority report relating to the compliance of rules
and regulations of the Exchange and SEC by his/her Member
Company. The report will have to submit to the Exchange within
15 days after the end of every six-month period ending on 30th
June and 31st December of the year.
Maintenance of the net worth at least half of its paid up
capital at all times.
Renewal of their license annually with SEC.
COMPLIANCE WITH RESPECT TO BROKER/DEALERS
BROKERS/DEALERS
Procedure of payment for CSE Membership:
AUTHORISED REPRESENTATIVE
CSE broker/dealer may appoint
Authorized Representative who are
registered with CSE and SEC to act as
an agent for doing all the activities
related to buy and sell of securities
through the stock exchange. The
Authorized Representatives shall
- Not be less than twenty-one
years of age;
- Have education
qualification of HSC or
equivalent;
- Not be adjudicated as an
insolvent
- Not be a person of unsound
mind;
- Not be convicted by a
competent court of an offence
involving moral turpitude;
Not received punished from the
Commission or Stock Exchange.
Chittagong
Stock
Exchange.
BROKER/DEALER
A broker, dealer or their authorized representatives complies with Code of conduct prescribed by SEC.
21
The trading platform of a stock exchange is
accessible only to broker, dealer and their
authorized representative. At present
Dealers can perform transaction on their
own account only while brokers act as agent
of their client.
Md.Yousuf Chowdhury
1 Warning
1 Penalization
1 Temporary prohibition from performance
1 Prohibition from any performance of work
in a member company within the period of
time prescribed by the Board
Chittagong
Stock
Exchange.
COMPLI ANCE AUTHORI TY
Every Broker/dealer shall appoint one of its director or Chief Executive Officer as compliance
Authority for a period not exceeding three years at a time subject to the following:
He/she is not convicted of any criminal offence involving moral turpitude by a
competent court;
He/She has not been found by the Stock exchange or court involved in misconduct in
respect of transaction in any security
He/ She have obtained at least graduation degree.
DI S CI PLI NARY ACTI ON AGAI NS T MEMBER
22
CSE may exercise any of its
following disciplinary powers
against a member if the
member or its director,
authorized representative or
employee commits any act or
omission as mentioned in the
Regulation 79 of the General
Rules and Regulations of
CSE.
Md.Yousuf Chowdhury
1 Expulsion
= Arrange training
= Ad hoc legal problems
= Liaison with Securities and Exchange Commission
= 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
CSE while list a company considers
ensuring that the companies meet the
listing criteria of the Exchange and also
considers the sufficiency of public
interest in the company.
The main eligibility criteria for initial listing contained in CSE
Listing Regulations is as follows:
The Company shall be a Public Limited Company under
the Companies Act,1994
Minimum Paid up capital of the applicant company
shall be BDT Ten Million (USD 0.20 million)
Share subscription must be by at least 250 applicants
In case your company fulfils the criteria, please fill in the listing
application form and send the documents as mentioned in the
regulation III (6) of the LISTING REGULATION for further
processing.
Chittagong
Stock
Exchange.
The expelled member shall forfeit to the Exchange its right of membership and all rights and privileges as a member of
the Exchange
LI S TI NG
This department is responsible for:
HOW TO LI S T
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Md.Yousuf Chowdhury
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L I S T I N G F E E S
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Chittagong
Stock
Exchange.
LISTING FEES
INITIAL LISTING FEE:
Up to Tk. 10 crore of Paid-up capital @ 0.25%
Above Tk. 10 crore of paid-up capital @ 0.15
However, the total listing fee shall be minimum of Tk. 10,000 (ten thousand) and
maximum of Tk. 20 lac.
A N N U A L L I S T I N G F E E
Slab/Paid-up Capital (Tk. In Million) Rates of Annual Listing Fees in Taka.
Up to 10 10,000
Above 10 & Up to 20 15,000
Above 20 & Up to 30 20,000
Above 30 & Up to 40 25,000
Above 40 & Up to 50 30,000
Above 50 & Up to 75 35,000
Above 75 & Up to 100 40,000
Above 100 & Up to 125 45,000
Above 125 & Up to 150 50,000
Above 150 & Up to 200 55,000
Above 200 & Up to 250 60,000
Above 250 & Up to 300 65,000
Above 300 & Up to 400 70,000
Above 400 & Up to 500 75,000
Above 500 & Up to 600 80,000
Above 600 & Up to 700 85,000
Above 700 & Up to 800 90,000
Above 800 & Up to 1000 95,000
Above Above 1000 100,000
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Md.Yousuf Chowdhury
DISCLOSURE PROCEDURE
The investors have equal and prompt access to
companys price-sensitive information. Listed
companies are required to file full, accurate and
timely information disclosures to the investors.
This will guarantee fair and orderly trading at
the Exchange. CSE monitor whether the listed
company notify timely and orderly the news of
any notice of the Meeting and entitlement, or
any decision related to the shareholders
immediately.
Essential information, which may affect the
stock prices, investment decisions, or investor
interests, must be disclosed within a specific
period, according to the table below:
DIRECT LISTING
Direct Listing is a doorway to list with the
Exchange for the company who
Does not require to increase its
existing paid up capital but want to list its
securities for prestige, liquidity benefit or
any other reasons and
Intent to off load the existing shares
of the shareholders for privatization
purpose.
1. Eligibility criteria for direct listing: The public limited
company having minimum paid Up capital of taka 100(one hundred)
million may apply for direct listing to CSE if it is/has
1 No accumulated loss
1 Regular in holding the AGM
1 in commercial operation for at least immediate last five
years and
1 Has profit in three years out of the immediate last five
completed accounting/financial years with steady growth
pattern.
2. Application for Listing: The application fee for Listing is Tk.
10,000/-(ten thousand). The Exchange examines among others the
following documents while giving approval to the listing:
1 Audited financial statements for the last five years.
1 A Credit rating report issued by the credit rating company
registered with the Commission with minimum investment grade
of BBB".
1 Due diligence certificate from the directors
1 No objection certificate from the lending bank(s) /financial
institutions of the company
1 Status of loan including information concerning loan default
1 Information Document
3. Information about the company to the General Public:
The Company shall prepare an Information Document for the
purpose of communicating to the general public the information
required to an investor for their investment decision. Information
Document shall be published in at least two widely circulated
national dailies minimum 7 (seven) days before commercial trade
upon listing by the Exchange.
4. Disposal of Shares: The existing shareholders of the concerned
company shall sell the shares through the Exchange upon listing. At
least 10% of their shareholdings in the company must be offered for
sell to the public within 30(thirty) working days from the date of
listing. However they are not permitted to sell more than 50% of his
existing shareholdings until the company holds the annual general
meeting after completion of one full accounting year of the company
upon listing with the Exchange.
5. Trading and Settlement procedure: Dematerialization of the
The Exchange disseminates the information through their respective trading terminals immediately after receiving thereof
from the listed company. Some information also requires to be disseminated through the newspapers by the issuers for its
shareholders after sending the news to the Exchange or the SEC.
Chittagong
Stock
Exchange.
The Board of CSE has the right to ease any condition in case of a deserving case.
LISTED COMPANY INFORMATION
COMPANY PROFILE COMPANY ADDRESS COMPANY DISCLOSURE (YEAR WISE)
25
A price sensitive information to
the Exchange
Within 30 minutes of the
completion of the Board
Meeting
A report of every sponsor or
director of a listed
Before 30 working days of
company disclosing his intention
to buy or
his expressing such
Sell or otherwise dispose of
securities in the company.
intention
The audited financial statement
requires to be submitted
Within 134 days from the
date on which the financial
years ends
Half Yearly Financial Statement
shall be transmitted
Within one month of close
of the first half-year
Md.Yousuf Chowdhury
DE LISTING
Grounds for explicit de-listing/cancellation of
listing criteria are as follows:
x Fails to comply with the requirements of
any of CSE listing regulations;
x Where the Exchange considers it
necessary for the protection of investors;
x Fails to pay penalty or any other dues
payable to the exchange for a period of
two years;
x Fails to declare dividend or bonus:
i) for five years from the date of
declaration of last dividend or bonus; or
ii) in the case of manufacturing
companies, for five years from the date of
commencement on commercial
production; or
iii) for five years from the date of
commencement of business in all other
cases
x Fails to hold its AGM for a continuous
period of three years;
x Gone into liquidation either voluntarily or
under court order;
x Fails to pay the annual list fees for a
period of 2 years;
x If securities are quoted below 50 per cent
of face value for a continuous period of
three calendar years.
No company will be de-listed from CSE unless
In a brief it performs the following
functions:
a) Spot verification
b) Check whether members are
following the company act or not
c) check whether members are
maintaining the books properly
d) maintain checklist
Chittagong
Stock
Exchange.
I NS PECTI ON
During the period, eleven brokerage
houses were inspected by SEC based on
some specific observations of
26
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
surveillance people responsible for
monitoring daily securities trading. In
this period the Commission requested CSE
to investigate into the books and
records of three brokerage houses of CSE
in respect of transactions of Bank Asia
shares and asked DSE to inspect books
and records of three brokerage houses of
DSE regarding trading of Bata Shoe
Company shares, Beach Hatchery Ltd
shares and Rahman Chemical shares. In
the referred period the Commission
decided that the SECs Surveillance Team
should conduct regular inspection of
books and records of at least one stock
broker/dealer of the stock exchanges in
each month. Accordingly, the SEC
Surveillance team carried out inspection
in compliance with the aforesaid
decision.
The SECs Surveillance team also detected unusual/abnormal trading of Tripti Industries Ltd, at DSE. Based on the
recommendation of the Surveillance Team the Commission suspended trading of securities of Tripti Industries Ltd. and
constituted an enquiry committee in this respect. During this period the SEC requested DSE to investigate into the
securities transactions of Lafarge Surma Cement Ltd. and NCCBL and requested CSE to investigate into securities
transactions of Lafarge Surma Cement Ltd. and BCIL. In the referred period, as a part of regular inspection, SECs
Surveillance Team visited two brokerage houses of DSE and two brokerage houses of CSE to examine books and
records for ensuring proper compliance with the securities laws. Besides, the Commission constituted five enquiry
committees to enquire into the transactions of Mercantile Bank Ltd., Mutual Trust Bank Ltd., One Bank Ltd, Uttara
Bank Ltd. and Bank Asia Ltd.
SURVEI L L ANCE
The Surveillance Department of the Commission monitors on real time basis the trading of securities on
Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. through non-trading version of work
27
Md.Yousuf Chowdhury
MARKET SURVEILLANCE & COMPLIANCE MONITORING
CSE maintain an effective market surveillance to
detect and prevent unethical, unusual and illegal
practices in the market. The Exchange Compliance
and Surveillance Department is primarily responsible
for day to day market surveillance, supervision and
compliance monitoring of trading activities, including
review of pricing of orders.
When any unusual market action occurs it is reported to the
Manager, Compliance and Surveillance. In many cases by
checking with Surveillance, the Manager will try to trace the
reason for the action to a specific cause such as recently
disclosed information, or rumors. Market surveillance may
also check broker firms as to the source and reason for
activity stemming from their particular firms. If no
explanation of the unusual activity is revealed the Exchange
may make a query to the Company to determine whether
they know the cause of the action. It the action appears to be
attributable to a rumor or report or to material information
that has not been publicly disseminated, the Company is
requested to take appropriate corrective action and may be
advised to halt trading until such action has been taken.
ENFORCEMENT
CSE put in place a thorough risk management
system which is regularly monitored to pre-
empt market failures. CSE Surveillance and
Compliance Department monitors the issuers
compliance activities and brokers regular
and/or trading activities on regular basis. It
watch performance of members, their net
worth, undertakes on-line monitoring of
members turnover position and exposure,
margins arrangements with exchange and
clients etc.
The Department conducts investigation of any act
of member firms or listed companies, as the case
which may be deemed to violate the rules and
regulations of CSE and/or SEC and gather all
evidence concerning the said acts to pass it to the
relevant committee.
While taking action for violation of any rules and
regulation CSE send a show cause notice to the
company with an order to comply the relevant
clause. And if not complies within stipulated time
then take appropriate action which may be to
impose fine, to warn, to suspend or to de-
list/terminate the listed/member company.
Manage trading and operate Vista
Settlement System
Maintain master file
Print daily reports and produce
statistics
Support internal users and setup and
train new system users
Chittagong
Stock
Exchange.
stations. Through this system the SEC Surveillance Officers watch the daily trading pattern and time to time
inform the top management of the Commission about the market condition. At the end of the trading period,
a report containing abnormal activities, if found during the trading period, is prepared and submitted to the
Chairman, Members and other senior officials.
MARKET SURVEILLANCE & ENFORCEMENT
SYS TEMS
The Systems Department carries out the following functions:
28
Md.Yousuf Chowdhury
= = Hardware Hardware
= = Softwar Softwar
e e
= Wide area network Wide area network
(WAN (WAN)
E Prepare and pay invoices
E Prepare primary accounts
E Receive and bank cheques
E Reconcile bank accounts and regular
cheques
Chittagong
Stock
Exchange.
Deal with user queries
Manage communication network
Manage information technology developments and suppliers
Manage internal information technology awareness
Support required by the department

FI NANCE & ADMI NI S TRATI ON
This department is responsible for the following:
E Act as company secretary
E Manage CSE finances
E Manage income tax deductions and payments
E Manage petty cash
S W O T A N A L Y S I S
O F C H I T T A G O N G S T O C K E X C H A N G E
S t r e n g t h s :
29
Access server
Central server/ stratus C 4000
series
PA-Risc processor
Fault tolerant continuously
available
16 GB hard disk
512 Ram
512 cache memory
Speed 96 MHz
Modem
Olte
U.P.S
Data storage DAT
Application software
CSE version of the VECTOR
(versatile engine for centralized
trading and on line reporting)
It has 3 models
1 BWS (Broker work
station)
1 Market operation
1 Surveillance
System software
Operating system-Unix
RDBMS (relation data base
management system): Sybase
Regional network
= Chittagong and Dhaka
members can connect their
own office through WAN
= Sylhet members can connect
through LAN
Country wide WAN
1 Network covers
Chittagong, Dhaka and
Sylhet.
1 Chittagong: Dhaka is
connected through VSAT and
T & T leased line as back up.
Ei line, High speed optical
fiber is used in the network
Md.Yousuf Chowdhury
1 .Trading from the three cities; out reach to
vast investors: Chittagong stock exchange has a
sound trading system with network containing it
three major cities: Dhaka, Chittagong & Sylhet. In
this way it operates from 3 major cities in
Bangladesh which really classified in expanding the
stock market and eventually it helps the not only
the existing investors to invest further but also help
the new investor to come to invest their money.
Sooth to say, it provides a strong communication
bounding through out the different cities.

2. Ready for future by opening avenues for
cross border trade: The trading & settlement
system of Chittagong stock exchange limited is
ready to meet and future growth of the market.
CSE expecting crosses border indexing under SAFF,
(South Asian Federation of Exchanges). The market
is wide open now days. The world is highly
globalized and market is getting much more
sophisticated. In this way. CSE has taken initiative
in following these rules as well. Its taken
auspicious step for the investor by trying to open
the door cross border communication especially
SAFF. This step it a further in enrichment of its
development.
3. Very competitive low listing fees: Listing
fees at CSE ltd. are very competitive & reasonable.
The listing fee for the up coming company is very
much reasonable and thats really boosts up the
company to be listed. The fees category was
presented in the very early of this report.
4. Market analysis & investors relations:
Chittagong Stock Exchange limited has a research
cell for continues market status apperception &
understanding investors general behavior. The R/d
is continuously forecasting the market, analyzing
its changes, the reason behind it. It has a well base
guidelines for the brokerage firm any violation it
will be strongly prohibited as well as serious action
is taken. Being a part of it, continuous interaction is
made upon towards the investor.
5. The best way to raise fund for your
company: In the era of free economy &
democracy, stock market provides an
effective linkage between large pool of
investors & entrepreneurs. Investors on
their free will can take risk & invest
directly with the project share of
ownership & profit. Any company or
organization that wants to maximize its
fund can generate it through share
market. In sooth, here the company is
involving the general people to be part the
company. In this way, it maximizes its
fund for further development.
6. Reduce reliance on debt finance:
Borrowing and their prescheduled
compulsory debt servicing could be
avoided if you are publicly listed company.
7. Tax benefits: If you are a listed
company you pay less tax. At the current
rate, listed companies pay at least 5% less
corporate tax than those who are not
listed.
8. Liquidity: Your shares will liquid.
Entrepreneurs may love to develop one
project successfully. Run it in a
transparent way & they change into cash
it when it need for the sake of developing
another one. Stock market can facilitate
your ambitious development path as an
entrepreneur. Share can be converted any
time into cash. If you know have the
sound notification about the market you
will be the master of it. Risk will be just
history. People have common notion of
this market in the very early of this market
that there is too much risk and one can
not get maximum return but bit by bit this
out worn thought is detached and more &
W e a k n e s s e s :
1. Stock markets operate on a particular time
in the daytime. This time span is not
sufficient for the non-institutional investors.
The time that it operates is very limited that
the daily transaction in doing so can not be
fulfilled which puts the investor in
tremendous crisis.
2. High bank interest rate possesses high
threat for stock market. High interest rate
always discourages the investors.
3. Lack of institutional investors. Still there is
lacking for the institutional investor. The CSE
operations, the CSE criteria, rules and
regulations are responsible for this. If the
favorable environmental attitude is available
more and more institutional investor will
come.
4. Regulatory body like SEC needs
modernization. The controller of CSE,
security exchange commission (SEC) need
more technological advancement. To
maintain a constant monitoring it must
fertilize its resource like technological,
personnel, departmental etc.
5. Lots of listed company does not perform
their duty regularly like they do not perform
AGM, GM regularly, do not provide dividend
regularly, do not inform to be investors etc.
The different organization is categorized into
A, B, N, and Z category. Those who perform
AGM regularly and declared dividend more
than 10% they are A category and who
perform AGM regularly and declared dividend
less than 10% they are B category, who are
new they N category and those who do not
perform AGM regularly and declared no
dividend are Z category.
O p p o r t u n i t i e s :
I. Investors are now more conscious about
investing their money into the shares of the
companies. New awareness arising to the peoples
mind, new publicity is made for the attraction of
this field. The system is much mobilized and try
capture more and more investors,
II. After 1996s incidence, now Securities &
Exchange Commission (SEC). The SEC is now well
structured and well-based, wellestablished.
III. The number of Internet users is increasing.
Internet is a key part of trading. Day by day the
using of internet is accelerating, that allow the
investors to an easy access of trading in terms of
shares. Now they can order the representative
broker to sell the shares or buy. So, internet
trading system (ITS) is a wonderful innovation for
CSE.
IV. The governments policy is changing. The
changing environment in share market provides
the precise help to the investors.
V. Commercial Bank reluctance to provide long
term long.
VI. SAFE (South Asia Federation of Exchange). OTC
market is a potential outcome for CSE. Now in
these very days, its prosecuting the south Asian
countries. The neighboring countries will be also
benefited by this. Huge round of transaction may
take place in this way.
VII. Lots of quality fresh business graduate are
coming up from both private and public education
sector in Bangladesh. These fresh graduates may
create an opportunities to stimulate
professionalism in stock market.
Chittagong
Stock
Exchange.

30
Md.Yousuf Chowdhury
T h r e a t s :
a. Regulatory bodys (SEC) regulation. The regulation of SEC still not up to mark that
may discourage in investing.
b. BTTBs monopolistic attitude. The logistic approach is still prevailing. The attitude
should obtain an administrative driven.
c. Bargaining power of listed companies. The continuous bargaining is still prevailing
which may impact in CSE.
d. The lion share of DSE.
e. Frequent political instability. The Micro environmental factor like political
instability always takes place in the country which seriously injured the investor. And
it case tremendous change in price flections of shares.
f. Lower growth rate & lower savings rate & per capita GDP.
g. The pace of industrialization is slow. The contribution of industrialization sector in
GDP is bellow expectation.
h. Most of the company do not provide satisfactory rate of dividend.
Key issue analysis:
1. Should CSE pour more money into R&D develop more sophisticated service quality.
2. Should CSE go for costly promotional campaign for expanding its current market to
attract new investors, Companies and Members.
3. Should CSE establish full-fledged marketing department to ensure proper marketing
and advertising activities.
Chittagong
Stock
Exchange.
31
Md.Yousuf Chowdhury
- 11 times more money
investing in Japan in 1987
than in the United States.
investing in Hong Kong in
1992 than in the US market.
investing in Finland in 1998
than in the United States.
- More than 10 times as
much investing in UK in 1990
than in US.
The stock market is acting like a
bull market for last few months. It
sounds like most stocks are going
to be uprising and volatile. No one
knows how long the momentum
will stay in the market.
Chittagong
Stock
Exchange.
Opportunities for Foreign investors In Bangladesh:
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.
Except five reserve sectors, all industries are open for private investment. Industries
earmarked for public sector investment are in the reserve sector namely:
(i) arms, ammunition and other Defense equipment and machinery
(ii) Production of nuclear energy,
(iii) Forest plantation and mechanized extraction within the bounds of reserved forests,
(iv) Security printing (currency notes ) & minting and,
(v) Railways & air transportation (except certain domestic routes and air cargo)
- No permission of the government
required to set up new industries.
-For obtaining industries facilities like
procurement of land, electricity, gas and sewerage connection, importation of capital
machinery and raw materials tax rebate, duty drawback facilities etc. industries need only
to be registered with the board of investment (BOI) in a simple prescribed from.
Investing in stock market is help out a company in business which leads to remove poverty
Market earns about 500 to 800 points within 4 to 5 months
in CSE and DSE which is a remarkable growth. DSE-20 was
1200 points in March and now it has jumped to 1777 and
32
Md.Yousuf Chowdhury
Investment companies that
continually offers new
shares and buys existing
shares back at the request
of the shareholder and uses
its capital to invest in
diversified securities of
other companies.
A security that gives small
investors access to a well-
diversified portfolio of equities,
bonds and other securities. Each
shareholder participates in the
gain or loss of the fund. Shares
are issued and can be redeemed
as needed.
It is a recognized principle that diversification of
investment reduces risk. An individual may not have the time,
expertise and resources to undertake such diversification.
Here arises the advantage of a Mutual Fund. Mutual Funds pool
the savings of a great number of investors and make
investments in a wide array of securities. In Bangladesh ICB
has pioneered Mutual Funds for the sake of investors and of
the capital market. Mutual Funds are known as open end Mutual
Funds. The issued capital of a Mutual Fund is limited, that
is, a Mutual Fund offers a limited number of certificates for
sale to the public. The amount of capital and the number of
certificates of each Mutual Fund remains unchanged. ICB
Mutual Funds are independent of one another. A Mutual Fund
being listed is traded on the Stock Exchanges. Price of
Mutual Fund certificates after IPO is determined on the Stock
Exchanges through interaction of supply and demand. The
market price of a Mutual Fund certificates is available in
Stock exchange quotations and in newspapers.
Chittagong
Stock
Exchange.
CSE-30 has surged to 2517 points from 1577 since March of
this year. The Market looks stronger and has attracted more
investors recently, and investors remain fairly bullish and
have earned confidence in the stock market. The question
is, anyone or investors have real information about profits,
sales growth, earning! Unfortunately it is not. It is difficult to
speculate a company's share price without real data on
whose business is growing in sales, who is grabbing the
market share and leading the market. That information is
not available yet to the public. It is true Bangladesh is one of
under developing countries with 112 millions of people. A lot
of development is essential to the country and it will happen
sooner or later. However, emerging stock market and
economy hardly get world attention. The market stays un-
attention to the investors because of revolt and government
corruption and natural disasters. When country's economy
gets started, they do it with a bang. According to study, the
Indian emerging markets will continue to grow at about
double the rate of the developed world. Every year there is
an emerging country, like Japan in the 1960s that grows at
least twice as fast as the United States. That means
business is booming....people have jobs and investors get
richer and richer. Let's take a look some of emerging
countries.
The moneymaking opportunities are endless when you invest in growing countries like China, Finland, India or probably
someday in Bangladesh but you have to invest wisely. Some of banking stocks went up sky-rocket and remained very
volatile; they jump 20 to 80 taka a day. The primary needs for the country is energy, housing, food, banking, insurance
and pharmacy. It shows the banking sector is doing better than others. Every investor made out of Banking IPOs at least
200/300 taka. The most conservative way to invest in CSE or DSE with a good return in the companies who provide
dividend at least 10%. You know that you will get guaranteed return within a few months.
:: Mutual Fund ::
33
Md.Yousuf Chowdhury
A mutual fund is types of investment vehicle where investors
pool their money In order to allow each investor participate
in a portfolio of securities. The individual investor doesn't
actually own each security but instead, he owns shares of the
mutual fund. The main benefit of a mutual fund is that it
provides a way for the investor to achieve diversification in
his investments without having to invest a lot of Money. The
first mutual fund was the Massachusetts Investors Trust
introduced in 1924. At the end of its first year, the fund
had 200 investors with $63,600 in assets. At the end of 1995,
the fund grew to 73,500 investors with assets totaling $1.8
billion! Now there are over 7000 different mutual funds
available for you to choose from. You may be wondering why
you should choose a mutual fund. Simple - a mutual fund
offers 2 large benefits over owning the stocks individually.
Those benefits are diversification with professional
management without having to invest a lot of money.
Diversification is
important because it helps
to reduce the risk. By
owning shares of multiple
companies, the funds
share values are not
devastated if an
individual company has a
poor performance.
Selecting which securities
to buy, the allocation of
cash and securities, and
when to purchase is all
done by the fund manager
or the management team.
The fund manager has the
training, time and the
resources to make the best
informed investment
decisions
Chittagong
Stock
Exchange.
WHAT IS A MUTUAL FUND?
B A C K G R O U N D
Mutual funds have become very important part of investing over the last decade.
Mutual fund shareholder accounts grew from 46 million to more than 131million
accounts with 38 million individual investors owning funds. In 1983 the mutual
fund industry had about $290 billion assets. By 1994 the asset base had
34
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
increased to $2.1 trillion and by June of 1997 reached $4 million. The growth in
asset value is a result in the three year bull market experienced from 1995
through 1997 and the increased popularity of mutual funds by those baby boomers
saving for retirement. The tremendous growth of mutual funds makes this industry
the second largest financial intermediary after commercial banks.
The concept of a mutual fund is best
understood by an example.

Types of mutual fund: Mutual fund can be classified in to
two basic categories:
O Open-end funds: An open-end investment
fund stands ready at all times to sell or redeem
shares from stockholders. There is no limit.
O Closed-end fund: A closed end investment
fund has a fixed number of shares and purchaser
& sellers of shares must deal directly with each
other rather than with the fund. Closed end
funds trade on an exchange or over the counter.
Furthermore the fund does not stand ready to
buy the shares from the investors.
35
EXAMPLE: Suppose you and your friends
are too busy to develop the expertise
needed to mange your own assets. One of
your neighbors however, has had years of
hands-on experience as a trustee of his
companys pension fund. You and your
friend decide to pool your money and
have this experienced investor act as
your investment advisor. He will be
compensated by receiving a small
percentage of the average amount of
assets under his management during the
forth-coming year.
Mutual funds are non banking or non
depository financial intermediaries that
gather funds from saving and investing
public and utilize the accumulated pool
of funds by investing in stocks, bonds,
currencies, futures, and options
contracts or a variety of other
financial instruments (A key element in
any M/F is its ability to provide the
investors with professional mgt. of
their funds along with other
professional services such as record
keeping, custodial services and prompt
dissemination of information)
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
T Y P E S O F M U T U A L F U N D S A V A I L A B L E
Domestic Equity Funds - These mutual funds
mainly focus on stocks offered by different U.S.
companies. With this type of fund there is a wide
range of offerings that takes into consideration the
size of the company, the stability of the company,
growth and the potential value of the company.
Global/International Funds - Global or
International mutual funds mainly allow the investor
to include foreign equities into their investments.
Although deemed slightly riskier their values do
tend to go up when domestic equities drop, offering a
balance to the investors portfolio.
Sector Funds - sector funds give the investor a way to focus on specific parts of the business world.
For example, niches like real estate, precious metals or financials. If an investor is able to tolerate
an amount of risk, they may end up benefiting from investing in this way. Particularly if the investor
knows something about that market segment.
Fixed Income Funds - fixed income mutual funds tend to be less volatile. This is the right fund for
an investor who is looking for income? Fixed mutual funds for the most part are made up of bonds,
CD's and money market funds. Yes, they do fluctuate with interest rates, still are a sound investment
for someone looking for an income generating portfolio.
Hybrid Funds - Hybrid mutual funds are generally made up of different investment sectors in one
mutual fund. For example, a usual mix may be the pairing of equities with Bonds or blue chip
stocks with riskier ones.
Index Funds - Index mutual funds imitate the selections and amounts of specified market indexes
like the S&P 500. They are generally unmanaged keeping costs down.

Enhanced Index Funds - Enhanced index funds are actively managed funds applying a portion of
their resources to outperform their benchmark indices.
Asset Allocation Funds - Asset allocation funds target investors who want a single product solution.
They are designed to invest across the primary asset classes including equities, fixed income
securities and money market. Each fund is allocated among different asset classes according to their
risk tolerances.
Conservative Allocation Funds - Conservative allocation mutual funds are usually for investors
with a minimum five-year investment timeframe.
36
Domestic equity funds
Global funds
Sector funds
Fixed Income Funds
Index Funds
Hybrid Funds
Asset Allocation Funds
Enhanced Index Funds
Conservative Allocation Funds
Md.Yousuf Chowdhury
M Mutual funds provide investors with a way to diversify their
investment under professional management, which most
investors may not be able to obtain on their own. Since the
funds operate with a large pool of money, the investors benefit
from economies of scale, such as a lower trading cost and a
higher yield. Besides delivering attractive yields, many funds
provide their investors with such services as check-writing
privileges, custody (as a service), and bookkeeping. Investors
also benefit from the knowledgeable investment choices of
securities and investment objectives that funds offer
T The cost to the shareholder of investing
in mutual funds comes in various forms:
front-end loads, management fees, cost
of maintaining and servicing
shareholder accounts (administrative
cost), redemption fees, and distribution
fees (also known as 12b-1 fees). As
mentioned before, a redemption fee is
usually levied on shares held for less
than a specified period. A distribution
fee is a charge on current shareholders
to cover the costs of advertising,
promotion, selling, and other activities.
It is sometimes combined with load
charges. All these expenses are
aggregated to obtain a single measure
of cost to the shareholder. An aggregate
measure commonly found in the
published data is the expense ratio
(expenses as a percent of assets). This
measure does not include sales load, if
there is one. Rea and Reid (1998)
discuss the calculation of an alternative
measure of total ownership cost that
includes the sales load.
BENEFITS
Mutual Funds substantially lower the investment risk of small investors through diversification
in which funds are spread out into various sectors, companies, securities as well as entirely
different markets.
Mutual Funds mobilize the savings of small investors and channel them into lucrative
investment opportunities.
Mutual Funds provide the small investor access to the whole market that, at an individual level
would be difficult if not impossible to achieve.
Because funds are professionally managed; investors are relieved from the emotional strain
associated with the day to day management of the fund. Moreover, the amount of analytical
research and study that goes into selecting the best securities for a fund portfolio can prove to be
overwhelming for the individual investor, and is best left to the experts.
The investor saves a great deal in transaction costs given that s/he has access to a larger
number of securities by purchasing a single share of a mutual fund.
The investor can pick and choose a mutual fund to match his/her particular needs.
Mutual Funds is the only vehicle which operates simultaneously both at the demand as well as
the supply side of the market. On the supply side, the Mutual funds, being itself a listed security
at the Stock Exchanges, introduces a good and reliable instrument in the capital market for the
small but astute investors. On the demand side, since Mutual Fund investments are primarily in
secondary market stock and bonds bought at the Stock Exchanges, the demand for blue chip
shares thus increases with the operation of the Mutual Funds.
Mutual Funds are one of the most strictly regulated investment vehicles. The laws governing
mutual funds require exhaustive disclosure to the SEC as well as the general public.
Chittagong
Stock
Exchange.
B E N E F I T S I N I N V E S T I N G I N M U T U A L F U N D S
.
37
Md.Yousuf Chowdhury
Invest in Mutual
Funds
Reduce risk
Maximize the security and expectation on investment opportunities
Liquidity
Transparency
Tax benefits
Low Costs
Affordability
REDUCE RISKS
AFFORDABILITY:
LOW COSTS
TAX BENEFITS
TRANSPARENCY
Chittagong
Stock
Exchange.
How to minimize the MF Risks?
I If you are a less risk taker and a long-term investor you can consider investing on Mutual funds.

Mutual Funds diversify your portfolio by investing in various
securities & minimize the risk because Mutual funds are not like
volatile as other secondary market shares.
The fund managers with the strong research take explore new
investment options make available opportunities for your
investments to flourish. Investments will be secured with a less risk
and moderate returns.
LIQUIDITY:
Quick access to your money and Mutual Funds can be bought and
sold on any business day. Of course, you dont need lots of money
to invest in mutual fund as the minimum investment in mutual fund
starts from 1,000 taka. A Mutual Fund because of its large corpus
allows even a small investor to take the benefit of its investment
strategy.
Mutual Funds are a relatively less expensive way to invest
compared to directly investing in the capital markets because the
benefits of scale in brokerage, custodial and other fees translate
into lower costs for investors.
The tax benefits that Mutual Funds investors enjoy at the moment
are the treatment of long-term capital gains. Double taxation can
be avoided by investing in Mutual funds for long-term.

The investor gets regular information on the value of his
investment in addition to disclosure on the specific investments
made by the fund, the proportion invested in each class of assets
and the fund manager's investment strategy and outlook.
38
MAXIMIZE THE SECURITY AND
EXPECTATION ON
INVESTMENT OPPORTUNITIES
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
CONTRIBUTION OF ECONOMIC DEVELOPMENT THROUGH CSE
Journalists plays pivotal role in developing share market CSE First Vice President says at seminar
Chittagong Stock Exchange has organized a seminar today at CSE conference hall for the print and electronic
media to make them aware about the core issues of corporate governance and investment tools, techniques
and process. A large number of journalists based in Chittagong gathered at the seminar titled journalists role
in developing share market- share market a pros and cons analysis.
Renowned Capital Market Experts and Analysis Mr. Yaweer Syeed; MD & CEO of AIMS of Bangladesh ltd.
and Mr. Arif Khan; MBA, FCMA, CFA, general manager of IDLC Bangladesh ltd. have presented their key note
papers respectively on Corporate Governance and its Practices and Investment instruments, process,
techniques and management portfolios.
First Vice President of the CSE Mr. Nasiruddin Ahmed Chodhury while addressing his speech as Chief Guest
said, This investment avenue is so highly volatile and risk-return oriented that it requires sources of
transparent information, adequate training, update information, analytical skill, investment technique etc. As
the Journalist Community is playing a pivotal role through circulating financial report on stock market and
since a large number of our general investors are fully dependent on their report, therefore your training is
necessary to uphold the quality of news on stock market.
He further recalled and said; probably you could not forget the tragic share market debacle blew in 1996 in
our country. The prime reasons of such incident found for inadequate knowledge, weak rules & regulations,
poor good governance etc. Anomalies and uncertainty had halted the progress of the countys securities
market in the past like other sectors which faced the havoc due to corruption, non-transparency and
inefficiency. While emphasizing on regulators responsibility, he said, As a self Regulatory Authority we must
be able to earn the confidence of the investors so that there is no scope for manipulation. SEC has been
initiating though actions against malpractice through its surveillance system and re-establishing discipline
and accountability in the listed companies, brokers, merchant banks etc. and taking proper steps on reforms
to consolidate the foundation of good governance. Listed companies are gradually following the international
accounting standard in the audited accounts of their entities to boost the confidence of investors. While saying
on investors, he said, presently investors are not in the dark regarding any financial disclosures of listed
companies rather they are becoming self analyst to analyze any financial information. Albiet we are confident
that there is very little chance of such violent collapse on our stock market again, nonetheless necessary
measures for example organizing awareness program is essential time to time for all who are dealing with
stock market. Our foremost objective, if innocent investors are still walking through on the dark tunnel, show
them light so that they can stand alone and remain as investors in our stock market. While giving example of
the neighboring countries economic development he said, If the literacy rate of a country is high then its
benefits are bound to reflect at every level of development including economic system. Economic theory says,
Share market is a barometer for measuring any countrys economic growth. Economic growth depends on
the investment in the stock market. The Stock Market must play a vital role as an alternative source of
investment fund to accelerate the economic development of the country. If our eyes set to our neighboring
countries, we can realize that their capital market largely contributes the rapid industrialization and economic
growth. We are ahead on the same path, but it needs massive and dedicate concentration while farming the
policy. We have to utilize our resources and for that, we need consensus and co-ordination. My earnest
request to you, please accumulate and pursue necessary prescription in order to develop our stock market
through your report and also keep hammering on those suggestions for implementation.

While drew attention of the Finance Ministry to the following recommendations, he said, If you allow me, I
can disclose in front of you some issues that can be addressed by the Finance Ministry of our Caretaker
39
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
Government. I believe my suggestions can contribute a little amount while formulating policies that are
coming soon.
1. Off-load profitable Government share through Stock Market
By successfully mobilizing funds from local sources through stock market, Government can
reduce its dependency on foreign funds to finance its development activities. Decision can be
taken to off-load certain percentage of govt. shareholding from various Governments, Private
and Multinational companies and to issue those shares to the public through the stock
exchanges. It would be a very pragmatic step, which not only increases the supply side but also
brings depth to the market.
2. Foreign / Multinational companies including Cell phone companies should be brought in
the stock market
Foreign / Multinational companies including Cell phone companies that are already doing their
profitably in Bangladesh should coerced to be in the stock market either by off-loading a portion
of their shares to the public or by raising funds from the capital market. In some neighboring
countries this is mandatory, but unfortunately absent in Bangladesh. This will certainly
strengthen and increase the size of the market as well as ensure participation of the general
people in national economic development.
3. BTTB Multi-metering billing system for CSE brokers should be waived
During the fixed call rate system, brokers used to pay monthly tk.150/- as line rent plus a
usage charge of tk.36/-(excluding VAT) to BTTB for logging into CSE trading network. With the
imposition of multi-metering system, brokers are required to pay around tk.2,500/- per
telephone connection to BTTB each month. This big difference is affecting the brokers in their
cash flow. As a measure of incentive to this important sector, we proposes that the brokers
community should be kept outside the orbit of multi-metering billing system, as it has been
waived for the users logging-0n with the Internet Service Providers (ISP).
4. Tax Related considerations
o To attract more entrepreneurs to raise their capital from the secondary market, a
significant (at least 20%) corporate tax gap between and non-listed companies should be
allowed.
o Income tax on dividend income above tk.25,000/- should be withdrawn to attract more
investors in the market.
o Necessary steps should be taken to penalize the companies enjoying tax holidays but
failed to invest a portion of their tax-exempted income in the share market as appeared
under section 46A of the Income Tax Ordinance 1984.
5. Advanced Income Tax (AIT) on Brokers
Brokers are paying 0.0015% on their transaction value as AIT to the govt. As a measure of
incentive to this important sector, we propose that the brokers AIT should be reduce to
0.0010% to enhance more transaction in the stock market.
6. Reducing Interest rates
40
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
Interest rates are a primary determinant of investment flow to the stock market. Due to
prevailing rise in the interest rates, a huge amount of funds are going out of the capital market
to banking sector as fixed deposits. We propose to reduce the interest rates for the sake of the
development of the capital market sector. We further propose that changes of such macro
economic policy like interest rates should be taken in mutual consultation with Ministry of
Finance, Bangladesh Bank, SEC and Stock Exchanges.
7. Implementation of Securities Training Institute & Inclusion of Stock Market knowledge in the
Education system
Establishment of the Securities Training Institute has become essential for research and
development of human resources in the different level of securities industry. The
implementation process, under the supervision of Securities and Exchange Commission needs
to be accelerated. Inclusion of Stock Market knowledge in the primary, secondary & college
level education is essential for developing the new generations with the knowledge of saving &
investments. We need your kind attention in this regard.
8. Separate simplified guideline for attracting NRBs to invest in the stock market through Non-
resident Investors Taka Account (NITA)
Non-resident Bangladeshis have been contributing significantly to the economy of Bangladesh.
Unfortunately, most of those funds are being utilized for consumption purpose and real estate
investment, while only an insignificant portion of those funds are being used in the financial
market for economic activities. Like other neighboring countries (e.g. Pakistan & India), our
NRBs should also be encouraged to place their fund directly in the capital market, which will
certainly strengthen our overall financial market.
In Bangladesh, there is a provision laid in Guidelines for Foreign Exchange Transactions by
non-residents through Non-resident Investors Taka A/C (NITA). But practically, NRBs could not
take the fullest advantage of these provisions due to some operational constrains/
requirements. We strongly believe, simplification of which, will bring significant flow of foreign
currency in the country. To develop our capital market, NRBs should be encouraged to actively
participate in the secondary market by resolving the factors involved in transferring money with
the banks. The issue needs to be addressed immediately. We hope, as soon as the fund
transferring problems are resolved, CSE Internet Trading Module can perform effectively to
channelise this money into the Bangladesh Capital Market.
9. Allowing Underwriting Business to Brokers
Earlier brokers were allowed to do underwriting business for IPOs. From the year 2000, brokers
having merchant banking license can only do the underwriting business. To facilitate general
brokers business, besides the merchant bankers, we propose that eligible brokers should also
be allowed to do the underwriting business based on some criteria.
10. Implementation of debt-equity ratio guideline for the companies seeking large loans from
banks
The debt-equity ratio guideline for the companies seeking large loans from commercial banks
should be implemented soon, to compel them to invest a portion of it in the share market.
11. Allowing investment of Pension, Provident & Gratuity funds in the stock market
41
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
Allowing a handsome portion of the pension, provident & gratuity funds for investment in the
capital market will certainly increase the depth of the market.
Among CSE Directors Mr. Abu Syed Shaidullah, Mr. BIJAN chakraborty, MR. Tareq Kamal
present and Mr. Nasirul Huqe, Chief Reporter of Bangladesh Shuprobhat made remarks. Chief
Executive Officer Mr. A B Siddique moderates the seminar.
R e c o m m e n d a t i o n s :
There are some of the steps That CSE can initiate for its better development:
o CSE should build favorable environment for the prospective investors like,
introducing new concept such as equity, derivatives, debt to attract the investors
o Proper advertising of the CSE web sites like billboard, newsletters, paper
advertisement through visual media etc.
o Creating awareness to the general public about stock market through media (satellite
TV).
o Obtaining monthly workshop or training for the investors.
o Calculating index system by Free-float based Index because a Free-float based index
is regarded as a better benchmark in comparison to a full market capitalization weighted index.
It not only reflects the market trends in a more rational manner, but also aids both active and
passive investing styles. It aids active managers by enabling them to benchmark their fund
returns vis--vis an investable index. This enables an apple-to-apple comparison thereby
facilitating better evaluation of performance of active managers. Being a perfectly replicable
portfolio of stocks, a Free-float adjusted index is best suited for the passive managers as it
enables them to track the index with the least tracking error.
o CSE should take the initiative to change the market schedule trade hour. Most of the
professionals, teachers, doctors, engineers, bankers, MBAs, military officers, government
officers, students and even the house wife found that the trading hour is not sufficient for them.
o So along with the current time, CSE should take initiative to add another trading
hour at night session.
o CSE should take initiative to rank the publicly traded company per month based on
their monthly performance.
42
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
o Off late, CSE enabled online trading. But it should be more sophisticated and more
reliable in terms of doing online trading for the investors.
o CSE should provide some online booth like ATM especially in commercial place i.e.
GEC, New market, Agrabad, Jamalkhan, Chokbazar etc where individual investor can get more
flexible in terms of receipt or payments.
CSE should provide some display units especially in shopping malls, air ports, Agrabad hotel etc
which will definitely attract the attention.
CONC L US I ON
After a well theoretical, analytical and mathematical clarification I would like to put an end by
saying that CSE has been taken initiative for enrichment of this sector. In earlier time, people even
were afraid to invest because of certain quires or they were unaware about it.
But now days the scenario has been changed, not only the potential investor now even the general
public is also involved in this arena for example: especially the students are doing this sort of
business.
Through there is certain development is still need to work out but we should remember that its life
time yet over 11 years and it has taken the key role of directing the capital market towards the
achievement of maturity through the adoption of technologies. Day by day new concept is been
introduced for the investors such as Derivatives is one of it.
CSE alone not capable in developing and reliable capital market, other institutions like ICB,
Merchant bank, SEC, DSE, Bangladesh, ministry of Finance, Commercial bank, Insurance company,
Member firms and such others are to extend their supporting hand to strengthen the momentum so
far been achieved in this sector.
43

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