It is a great pleasure for me to present the Annual Report of Securities and Exchange Commission for FY 1999-2000 which is seventh in a row.
This report would have been presented by Mr. M. A. Syed, Former Chairman of SEC, unless he had to relinquish his position to assume the greater responsibilities of the Chief Election Commissioner of Bangladesh before the expiry of his tenure in SEC. I take this opportunity to pay rich tributes to the contributions of my outstanding predecessor. I feel very fortunate to have had the opportunity of working with such a distinguished public servant as a member of the Commission. He made a major contribution to the development of the capital market, the most notable of which being the role he played in initiating the much needed reform measures. He served the Commission with great diligence and distinction. His commitment to work will act as a source of inspiration for all of us in SEC.
During the reporting period (1999-2000) Bangladesh capital market witnessed a great deal of changes. Considerable reforms and structural changes took place during this time. Market forces coupled with timely regulatory steps were able to check the slide in the index and gradual improvement in the index as well as positive change in value and volume of trading were marked particularly during last quarter of the reporting year. There has also been remarkable increase in initial public offerings. Investors’ response to the new issues was also encouraging. Most issues were oversubscribed by 3 to 4 times. This reflects that entrepreneurs who have acceptability and credibility to the investors can tap investors’ fund from the primary market.
In order to provide greater protection to the investors the Investors Protection Fund Regulations have been framed for setting up separate funds at both the exchanges. The regulations will facilitate settlement of the investors’ claim against defaulting brokers/dealers arising from their insolvency and winding up of business. Alongside Depository Regulations have been published in the official gazette to pave the way for establishment of Central Depository System. Amendments have been made in the existing regulations relating to submission of audited accounts, adoption of International Accounting Standards (IAS) and International Standards of Auditing (ISA).
much-talked-about private sector mutual fund got listed with both the bourses
in May 2000 by a private asset management company. The over-subscription
of the fund by 8 times reflects investors’ confidence in the mutual funds.
We expect more private sector mutual funds to be floated in the coming
The Capital market of Bangladesh has started taking a healthy shape though we understand that we have a long way to go and there is no scope for complacency. At present, the trading in the stock exchanges concentrates on equity shares and mutual funds. To introduce trading of fixed income securities and new financial instruments in the market the Government is eager to establish a bond market. The World Bank through a project is now assisting in the development of a bond market in Bangladesh. The project, due to commence in November 2000, will mainly focus on framing necessary regulations for issuance and trading of bond at the primary and secondary markets.
Based on the experiences in the past SEC also advocated for rearranging the trading and settlement system which took effect from July 2000. Under the new arrangement, companies which failed to hold annual general meeting in the last English calendar year and also failed to declare dividend during the last four years have been withdrawn from the daily netting facilities of the exchanges. At the same time SEC pressed hard for strengthening the surveillance and supervision functions of the bourses and as a result both the exchanges made considerable progress in strengthening these two departments. Also during the reporting year the Commission inspected a large number of brokers/dealers, merchant banks and other market intermediaries.
The last FY also saw the Commission taking a series of steps towards bringing discipline in securities trading, restoring investors’ confidence in the capital market and updating the securities related laws in line with the best practices. It has taken punitive actions for violating securities laws and initiated legal and administrative proceedings against some violators. During the time the Commission has installed the Securities and Exchange Commission Automation System (SECAS). We hope to take advantage of the newly acquired technology.
We have maintained close and cordial relationship with the securities market regulatory bodies of other countries. In 1999-2000 the Commission participated in the Annual Conference and Asia Pacific Regional Committee Meeting of International Organization of Securities Commission (IOSCO). The Commission also sent participants to the Seminar Training Program of ISOCO held in Montreal, Canada. Some of our officers have received on-the-job training in the regulatory organizations in the Asia Pacific Region. We express our gratitude to Securities and Exchange Commission, Thailand, Securities and Exchange Board of India (SEBI), Monetary Authority of Singapore, Securities and Exchange Commission of Sri Lanka, United States Securities and Exchange Commission, Indian Institute of Management, US-based International Law Institute, Georgetown University, UNDP, Asian Development Bank, The World Bank, The International Monetary Fund (IMF) and IOSCO for arranging on-the-job training for our staff officers, inviting us to different professional seminars/workshops and in some cases sponsoring our participation in those programs.
While the past year was both challenging and successful in many ways, we suffered a tragic loss in 1999 with the passing away of Mr. Khairul Anam Khan. He was Head of the Commission’s ever-vigilant Surveillance Team and was one of our most respected and hard working officers. We mourn his untimely demise and pray for the salvation of his departed soul.
The Commission also places on record the contribution of our two former members Messrs Faizuddin Ahmed and Imdadul Huq. Both of them successfully completed their three-year tenure and retired from SEC in January 2000.
conclusion, I take the opportunity to express our gratitude to the Ministry
of Finance for giving guidance and supporting SEC’s efforts in the implementation
of reform measures. I gratefully acknowledge the cooperation of Bangladesh
Bank, Stock Exchanges, Investment Corporation of Bangladesh, all market
intermediaries and Bangladesh Association of Publicly Listed Companies.
have firm conviction and confidence that the Securities and Exchange Commission
will be able to successfully implement the necessary reforms to ensure
fair practices and a sound framework for the smooth operation of the capital
market where the investors’ interest will be fully protected.