Review of

Securities Market in Bangladesh: A

Critical Appraisal of its Growth Since
its Inception in 1954

Part 4

Reforms Made during 1997-2002

Major Reforms Made during 1997-2002:
Strengthening market regulation and supervision;
Developing capital market infrastructure;
Modernizing capital market support facilities;
Increasing the limited supply of securities in the
market; and
Developing the institutional sources of capital to
improve demand for securities
Securities Market in Bangladesh: A Critical Appraisal

Strengthening Market
Regulation and Supervision
SEC authorized to make by-laws without the
prior approval of government.
Increased organizational strength of SEC.
Introduction of prior approval of SEC before
registration of companies in the Market.

Introduction of weekly investor education

program by SEC.
Securities Market in Bangladesh: A Critical Appraisal

Developing Securities Market

Infrastructure
Restructuration of the boards of the DSE
and CSE.
Separation of policy makers and
management body of DSE.
Mandatory dual listing in both DSE & CSE
was cancelled to encourage competition.
Introduction of requirements of the listed
companies to submit financial statements to
the SEC.
Securities Market in Bangladesh: A Critical Appraisal

Modernizing Security Market

Support Facilities
Open outcry changed to
automated trading system
Depository Act 1999 created the
Central Depository of
Bangladesh Limited (CDBL)

Securities Market in Bangladesh: A Critical Appraisal

Measures for Increasing the

Supply of Securities
Disclosure-based Regulation
Package of Tax Benefits offered:
10% tax rebate for companies declaring
25% dividend
Reduction of corporate tax rate from 40 to
35%
Registration charges fixed
Licenses given to various merchant banks
Promulgated separate rules to facilitate rights
and secondary issues
Issuance of mutual funds
Securities Market in Bangladesh: A Critical Appraisal

Measures for Improving

Demand of Securities
Enables trust funds to invest in securities
(25%)
Any insurers funds will be invested in various
securities (30%)
Investment Corporation of Bangladesh
divided for providing better services (3
subsidiaries)
Credit Rating Information and Services (April
2002)
Saving bonds situation (8 savings bonds, 4
closed)
Securities Market in Bangladesh: A Critical Appraisal

Measures for Improving

Demand of Securities
Stamp duty withdrawn
Tax exemption threshold increased
(40,000 from 30,000 Taka)
Maximum amount of tax free
investment in IPOs increased (.25M
from .2M Taka)
Listed companies divided according to
performance (A, B and Z)
Securities Market in Bangladesh: A Critical Appraisal

Incentives Offered to
Foreigners and NRBs
Treated equally in terms of capital gains and
dividends
Avoidance of double taxation
Granting multiple entry visa (6 months)
Foreigners to be offered citizenship (US$
0.5M, US$1M)
Permanent residentship (US$ .75M)
Quota reserved in new issue of securities
(10%)
Maintain foreign currency deposits
Securities Market in Bangladesh: A Critical Appraisal