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Prime Minister Tarique Rahman on Wednesday unveiled a wide-ranging reform agenda to restore stability in the country’s stock market, rebuild investor confidence and bring to justice those responsible for market manipulation that left thousands of investors financially ruined.
Replying to a written question during the 21st sitting of the first budget session of the 13th Jatiya Sangsad, the prime minister said the government has a plan to identify all those responsible for the prolonged decline of the stock market and take legal action against them.
He said investigations into stock market scandals have already been conducted through the Anti-Corruption Commission (ACC), leading to the identification of several individuals and the filing of cases against them. Investigations are continuing to determine whether other individuals or institutions were involved.
The parliamentary sitting, chaired by Speaker Hafiz Uddin Ahmed, took up the question raised by lawmaker ABM Mosharraf Hossain on behalf of Khulna-4 MP SK Azizul Bari.
The prime minister said various experts, investors’ associations and investigative bodies had examined the reasons behind the persistent downturn of the capital market during the previous Bangladesh Awami League government.
According to those findings, the principal causes included market manipulation and artificial price inflation or suppression, irregularities in initial public offerings (IPOs), bond issues and other securities, weak regulatory oversight, delayed enforcement actions, poor corporate governance, lack of transparency in financial reporting, limited participation by institutional investors, declining investor confidence, policy inconsistencies and the absence of an investor-friendly tax regime, he added.
He said the Bangladesh Securities and Exchange Commission (BSEC) has imposed fines amounting to Tk 14.97 billion on individuals and institutions involved in market manipulation, irregularities and corruption. Reports prepared by investigation committees identifying those responsible have also been forwarded to the ACC for further legal action.
The prime minister said the government is determined to restore stability in the capital market and strengthen investor confidence by promoting good governance, transparency, accountability, greater market depth through product diversification and wider investor education.
As part of that effort, he announced a series of priority programmes, saying that, “The government appointed a new BSEC chairman and three commissioners on June 4 to strengthen the regulator with experienced professionals. Soon after taking office, the new commission withdrew the long-standing floor price mechanism.”
The government will encourage profitable state-owned enterprises to list on the stock exchanges through direct share offloading, while creating opportunities for multinational corporations and other large-cap companies to do the same, the PM said.
“It will also encourage fundamentally strong companies, including small and medium-sized enterprises (SMEs), to enter the capital market.”
“To curb market manipulation, legal protection and incentives will be introduced for whistleblowers reporting irregularities.”
“The government also plans to introduce a new policy for the enlistment of approved auditors and audit firms to strengthen the auditing of listed companies and market intermediaries.”
“Other initiatives include launching a Foreign Portfolio Investment (FPI) onboarding portal, reforming regulations in line with international standards, introducing a one-stop securities custodian service, reducing capital gains tax, abolishing double taxation on dividend income and digitalising the process of opening Beneficiary Owner (BO) accounts and repatriating investment capital.”
The government will amend securities laws to allow direct filing of cases before special capital market tribunals and establish both a Capital Market Reform Commission and a Special Investigation Commission to oversee reforms and investigate irregularities, the prime minister added.
The reform package also includes the use of blockchain technology to expand market infrastructure and investment products, the introduction of online and mobile-based BO account opening and trading through electronic Know Your Customer (e-KYC) services, investment-friendly tax reforms, banking and mobile financial services (MFS)-based BO account transactions, artificial intelligence-powered market surveillance, stronger corporate governance standards, enhanced investor protection measures, modernisation of securities laws and trading of government securities—including Treasury bonds, Treasury bills and government Sukuk—through the stock exchanges to broaden retail investor participation.