The securities regulator is working independently without facing pressures or entertaining undue demands from any quarter, its head says.
Instead, "Our control over the market is increasing day by day," chairman of the Bangladesh Securities and Exchange Commission (BSEC) Prof Shibli Rubayat Ul Islam said in an interview with the FE.
"We're determined to ensure good governance in the country's stock market," he said.
He elaborated on his efforts to facilitate a daily turnover of over Tk 20 billion and a market capitalisation of Tk 15 trillion since helming the commission.
From the beginning, the commission took many stern actions, including imposing hefty penalties on many issuers and unscrupulous individuals.
In the wake of the BSEC's stern actions, a total of 17 directors of nine listed companies lost their directorship, as they clung to their positions without holding the minimum two per cent shares.
After taking charge in last May, many initiatives of the reconstituted commission led by Prof. Islam won plaudits.
"We do not face lobbying from any level of the government. Without facing any interruptions, we can work beyond bias to ensure governance as the Prime Minister and the relevant ministry provided us with such a freedom," Prof. Islam said.
Asked, whether he is satisfied with the ongoing monitoring and supervision by his commission, the chairman said, "Not satisfied yet as there is a huge scope for development. But we are observing the developments."
Regarding the return of suspected influential players in the market in recent days, Mr Islam said if "they really come back, they will not be able to do anything."
"We know all as we watch the market. They will come under the regulatory grip through the market surveillance system," said the BSEC chairman.
He said the Prime Minister is also watching the market with due importance.
"We are not disheartened as our Prime Minister and the ministry concerned will be with us for the sake of economy and country," said Prof. Islam, requesting others to make them informed if there exists a lack of governance.
Asked, whether the market is now back to its old path, the BSEC chief said factors, especially rumours, are responsible for the market's unusual movement.
"Apart from different corporate declarations, the decisions of the central bank and revenue board also leave impacts on the market's movement," he said.
He noted bubbles are not visible in the capital market and investors have overcome the panic stoked by frequent corrections in index and turnover.
Asked about the BSEC's plan to break the cycle of ups and down, Prof Islam said they cannot intervene investors' decisions on a regular transaction.
"We can only look at it how the daily turnover can be enhanced. So, our target is to facilitate a market capitalisation worth Tk 15 trillion from the existing Tk 5.0 trillion," he said.
The securities regulator also wants to see a daily turnover of over Tk 20 billion happen, he said, expressing the hope the market capitalisation and daily turnover targets will be achieved during his tenure.
The BSEC chairman said presently the capital market is the most suitable place for investments in terms of returns as the interest rates on FDR (Fixed Deposit Receipt) are on the wane.
"Investors can maximise their profits if they come forward with the plans of long-term investments. So, we can say that the capital market is now the best place for profit and wealth maximisation," the BSEC chairman insisted.
That said, the BSEC chairman vented his anger at the banks' reluctance to put money into the stock market.
"Large borrowers continue to default. Up to 90 per cent of the banks' investments made in the capital market have already been covered. Nevertheless, the banks are not coming forward with their investments in the capital market," said Prof Islam.
He said the amount of the banks' profits generated from the capital market was higher than that from other areas.
"There will be no erosion of banks' investments if the index of the stock market crosses the 6,000-point mark"
According to information of the Bangladesh Bank (BB), some 25 banks have so far invested Tk 10.33 billion in the capital market following the BB's circular issued in February 2020 to support the stock market through the formation of a special fund worth Tk 2.0 billion each.
Asked about the BB's role in facilitating the banks' investments, Prof Islam said the BB could have made the banks' investments mandatory in the capital market without mentioning the word 'may' in the circular.
"We want additional support from the central bank to boost the size of the capital market. This will benefit both the banking sector and the government," said the BSEC chairman.
The country's stock exchanges were demutualised in November, 2013 with a view to separating the ownership from the management for good governance.
After the demutualisation, the alleged influence of the some shareholder directors in board affairs came under discussion several times, despite independent directors are the majority on the board.
"This trend has continued for a long time and that's why we have laid importance on enhancing the role of independent directors. We hope the listed companies will also come out of the grip of families following the increased role of independent directors."
In reply to another question, the chairman said the desired dividend of the demutualisation of bourses has yet to be reaped.
Asked, whether the securities regulator is carrying out the exchanges' jobs such as marketing for the listing of good companies, the BSEC chairman said the commission cannot sit idle if others do not carry out their own jobs.
Asked about the reluctance of state-owned entities in going public, the BSEC chairman said the public companies may be following the "go-slow" policy to come under the corporate governance and accountability set in public issue rules.
"The securities regulator will provide them with necessary support to float shares as per the government's support," said Prof Islam.
While speaking on investors' less confidence in mutual funds, the BSEC chairman said that there were some problems in the managements of fund managers.
"Some investments were also made beyond the stipulated areas. The erosion of the capital market has also squeezed the portfolios managed by the fund managers," said the chairman.
He has also laid importance on floatation of more MFs through the state-run Investment Corporation of Bangladesh (ICB).
The chairman said multinational companies will not be listed unless fiscal benefits are ensured for them.
"That's why, we have proposed a 15 per cent gap between the corporate tax paid by listed and non-listed companies. We hope MNCs will be interested in going public if our proposed tax gap is taken into consideration in the upcoming budget."
Asked about the listing of many local companies having profitability, the BSEC chairman said some business groups have started communicating with them to learn how to list their companies.
"I do not want to mention the names of the business groups, which have communicated with us. Many local companies having reputation will be listed soon," he added.
In reply to a question on the achievement of the capital market over the 50 years of independence, Prof Islam acknowledged that the stock market's growth was not consistent with that of the economy.
"We have continued our efforts to increase the supply of quality shares along with approving bonds setting the provision of mandatory listing with the stock exchanges. We hope the market cap to GDP ratio will be satisfactory in the coming days," said the BSEC's chairman.
Regarding the role of issue managers, the BSEC chairman said there were many complaints against many issue managers, who had involvement in manipulating the accounts of the companies.
"We are taking punitive measures against issue managers along with scrapping their IPOs," the BSEC boss said, hoping issue managers will play their due role in attracting quality IPOs.