I WILL BE AVAILABLE ON THE 20

TH
FROM 9:0-11:30. IF YOU HAVE ANY QUERIES
YOU CAN COME AND SEE ME DURING THIS TIME.
BANGLADESHS CAITAL MAR!ET:
1996 Share Market Crash still remains as a bad memory for today's capital market regulators as
well as the investors of Bangladesh !ver the last " years# the $overnment of Bangladesh has
taken a number of regulatory measures to boost the capital market of the country
%he $overnment even sought assistance from various international agencies to suggest necessary
capital market reforms for Bangladesh %he main international agencies that have been working
in the capital market reforms pro&ects in Bangladesh today are'
() (sian *evelopment Bank +(*B)
B) ,nternational Monetary -und +,M-)
C) %he .orld Bank
*) /S(,*
0) /nited 1ations *evelopment 2rogram +/1*2)
I"#$%&"'( C)*+&",(#:
,nsurance companies in Bangladesh could invest their insurance funds only in'
() $overnment and $overnment approved securities
,n particular# the insurance companies used to invest their funds in'
B) 1ational Savings Certificates +1SCs) 3owever# since the reduction of interest rate on the
1SCs# the insurance companies have been looking for alternative channel to make
profitable investment
%herefore# after the enactment of ,nsurance +(mendment) (ct 4555# the insurance companies are
permitted to invest up to 657 of their funds into any other investments# including securities
market products
-or e8ample# according to a recent statutory order of the *epartment of ,nsurance# the insurance
companies in Bangladesh are allowed to invest in the state9owned ,nvestment Corporation of
Bangladesh +,CB) funds and those floated by its subsidiaries 3owever# it is not understood why
the insurance companies are still not allowed to invest in private mutual funds
("#,)" F$"-#:
2rivate pensions and the provident funds were re:uired to fully invest their funds into'
() $overnment securities only 3owever# the Section 45B %rusts +(mendment) (ct 4555
permits private pensions and provident funds to invest up to 4;7 of their total investable
funds into listed securities
M$.$&/ F$"-#:
3aving realised that the mutual funds are one of the ma&or sources of capital that can be invested
in securities market# the $overnment decided to promote floating of private mutual funds in the
capital market
Securities and 08change Commission +S0C) encouraged private sector9sponsored mutual funds
to operate in the securities market (s a result# the first private mutual fund +(,MS -irst
$uaranteed Mutual -und) was licensed in <anuary 4555 and listed on the stock e8changes in
May 4555 %he second private mutual fund +$rameen Mutual -und) was registered with S0C in
(ugust 4551
,CB had been acting as the sole asset management firm in Bangladesh ,CB was restructured to
create three new subsidiaries to carry out'
() merchant banking
B) mutual fund operations
C) stock brokerage functions separately
%he company is engaged in investment management= more specifically floating and managing
both open9end and closed end mutual funds# provident funds etc %he company is dedicated
towards development of mutual fund industry as well as the capital market of Bangladesh %he
Mutual -unds are managed by ,CB as fund manager for which receives commission >17
%he ,CB subsidiaries are '
+a) ,CB Capital Management ?td +merchant bank)= +b) ,CB (sset Management ?td +manager
of trusts and funds# including mutual funds)= and +c) ,CB Securities %rading ?td +Stock
Broker and Securities ?td)
Besides# the parent ,CB# which does not come under the regulatory framework of the S0C#
continued to manage the e8isting mutual funds %herefore# these funds can'
() borrow unlimitedly without any :uantitative restriction on their investments in a
particular company# group or sector like the private funds
B) (lso# in violation of the mutual fund rule# the ,CB or the ,CB (sset Management ?td
does not publish net asset value or submit any report or pay any fees to the S0C %his#
therefore# creates an unfair competition between public sector and private sector mutual funds
2rospective sponsors of mutual funds +M-s) are facing a serious dearth of trustees# denting the
growth of M-s and making limited choice for the asset management companies +(MCs)
!nly three companies are currently operating as trustees when a number of financial institutions
willing to float M-s# in recent times# are knocking at the door of the (MCs# industry insiders
said
%hey suggested issuing more licences to the :ualified and reputed financial institutions to
increase competition to cater to better service for the M- industry as well as help create
alternatives for the (MCs
2resently# Bangladesh $eneral ,nsurance Company# state9owned ,nvestment Corporation of
Bangladesh +,CB) and $rameen -und are the three companies which have trustee licences and#
,CB and Standard Chartered Bank are the custodian licencees
(ll mutual funds are re:uired to be registered with the S0C before they launch any scheme
( number of financial institutions +-,s) such as %rust Bank ?td# ,-,C Bank ?td# 2rime Bank#
Mutual %rust Bank# Southeast Bank# (l9(rafah ,slami Bank# B@(C Bank# Standard Bank#
(grani ,nsurance# $reen *elta ,nsurance and /nion Capital have already decided to sponsor
close9end mutual funds
Currently# a total of 16 mutual funds are listed with the bourses !f them# ,CB and its
subsidiaries have managed 1A mutual funds# (,MS Bangladesh three and BS@S +Bangladesh
Shilpa @in Sangstha) 2rime -inance have one each
Mutual funds in the neighbouring countries account for more than B5 per cent of their total
market capitalisation of while in Bangladesh# mutual funds has a share of only 4"A per cent in
the total market capitalisation
Closed9end Mutual -unds'
%he closed9end mutual funds are# namely# ,CB (MC? -irst Mutual -und # ,CB (MC? ,slamic
Mutual -und# and ,CB (MC? -irst 1@B Mutual -und# ,CB (MC? Second 1@B Mutual -und#
and 2rime -inance -irst Mutual -und
!pen9end Mutual -unds'
%he open9end mutual funds are# namely# ,CB (MC? /nit -und# ,CB (MC? pension 3olders'
/nit -und ,nvestors have shown overwhelming interest in all the mutual funds ,CB (MC?
pension 3olders' /nit Certificates are sold and repurchased on the counters of ,CB (MC? 3ead
!ffice and the branch !ffices of ,CB ,CB (MC? pension 3olders' /nit Certificates are sold
e8clusively to the retired pension holders