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The Financial Express

Regulatory compliances, bearish mkt outlook main reasons

Number of active BO accounts dips

There are currently 1,633,213 individual accounts and 931,885 joint accounts


FE Report | Published: January 25, 2020 12:05:09 | Updated: January 28, 2020 11:48:03


File photo (Collected) File photo (Collected)

Some 234,503 beneficiary owners' (BO) accounts were closed in last 12 months since January 23, 2019 due to non-payment of maintenance fees, regulatory move and depressed capital market outlook.

The number of active BO accounts stood at 2,578,283 as of January 23, 2020 which was 2,812,785, just a year ago on January 23, 2019, according to data from the Central Depository Bangladesh Ltd (CDBL), which preserves electronic data of all individual and institutional investors.

Some 234,503 BO accounts were closed between January 23, 2019 and January 23, 2020, while DSEX, the prime index of the Dhaka Stock Exchange (DSE), lost 1,411 points or 23.82 per cent during the period under review.

To trade in the secondary market and apply for primary shares, an investor has to open a BO account with the CDBL through a depository participant, which is usually a stockbroker or a merchant bank.

The officials familiar with the development said a good number of BO accounts were closed in 2019 due to non-payment of maintenance fees and a regulatory move taken to ensure compliances.

An official concerned said a good number of BO accounts were closed after June, 2019 following a circular issued by the Bangladesh Securities and Exchange Commission (BSEC) to remove irregularities occurred during opening accounts.

On June 30, 2019 the securities regulator asked the CDBL to submit a report on the compliances maintained in opening investors' BO accounts.

The regulator issued directive as many BO accounts were opened using same national ID number, mobile number and bank account.

"The depository participants (DPs) had to close many unlawful BO accounts following the BSEC's directive. That's why the number of active BO accounts declined during the period under review," the CDBL official said preferring anonymity.

Of the total number of active BO accounts right now, male investors own 1,879,579 accounts while female investors 685,519 and company 13,185 as of January 23, 2020, the CDBL data shows.

There are currently 1,633,213 individual accounts and 931,885 joint accounts.

The non-resident Bangladeshis own 145,420 accounts opened to conduct share transactions or to apply for IPO (initial public offering) shares.

However, half the active BO accounts exist in name only.

Those accounts have no role in daily share transactions as they have either zero balance or have never been used in share trading.

This has been happening over the last five years, the CDBL official said.

The number of BO accounts with share balances was 1.59 million in 2015, 1.53 million in 2016, 1.29 million in 2017, 1.30 million in 2018, and 1.27 million as of June 30 2019.

Some stock brokers said a significant number BO accounts are maintained by investors to apply for IPO shares.

In 2016, the securities regulator reduced the renewal fee to Tk 450 from Tk 500 for each BO account with the aim of reducing financial burden on investors.

Of Tk 450, Tk 200 goes to the public exchequer, Tk 100 to depository participants (DPs), Tk 100 to the CDBL and the remaining Tk 50 to the BSEC.

The number of BO accounts reached its peak at around 3.4 million in the fiscal year 2010-11, the year of market bubble-burst, as people, lured by the booming share prices, then had rushed to open accounts with different brokerage houses.

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