Turnover on OTC market hits two-year low

Transaction on over-the-counter (OTC) market on the Dhaka Stock Exchange (DSE) slumped 68 per cent year-on-year in 2019, hitting two-year low amid gloomy market outlook.

The shares of the companies, which were de-listed from the main trading floor, are traded on the OTC market.

The Bangladesh Securities and Exchange Commission (BSEC) formally launched the OTC market on September 06, 2009 in an effort to facilitate the trading of de-listed companies.

Market operators said OTC market of the DSE remained almost inoperative since its launching 10 years back, causing only sufferings to some investors rather than relieving them.

They said the situation has intensified the sufferings of the investors who became victims of junk shares with the capital market debacle in late 2010-2011.

Currently, 65 companies are listed on the OTC market which started with 51 companies in 2009.

Between January 01 and December 30, 2019, about 15.37 million shares worth Tk 223 million had been traded in the OTC market.

In 2018, about 21.68 million shares worth above Tk 703 million had been traded in the OTC market.

Total turnover plunged 68 per cent year-on-year in 2019 to Tk 223 million on the OTC market and the transaction executed on OTC market is still insignificant compared to single-day transaction of the prime bourse.

The daily turnover stood at Tk 4.80 billion on an average in 2019, whereas the OTC market witnessed a total turnover worth only Tk 223 million in 2019.

Ariful Rahman, a small investor, said he could not sell even a single share in the just concluded calendar year. "It's a buyer-less market," he said.

Another investor said that he has about Tk 0.87 million shares in the OTC market, but failed to sell due to complex system. He alleged that the buyers do not show interest in purchasing stocks due to inconvenient selling procedure.

He urged the securities' regulator to make the transaction process easier and more functional.

An official at the DSE OTC market said the investors losing their interest in stocks trading in the OTC market as they considered those risky. "Besides, they are confused whether the OTC stocks could be re-sold or not," he said.

To protect the investors' interest, the securities regulator should reconstruct the board of directors of the companies under OTC market or appoint administrators in the companies, said an analyst.

Recently, the securities regulator has taken an initiative to make the OTC market vibrant through the reforms of rules.

The BSEC also formed a three-member committee to prepare a report on possible changes of rules for the OTC market.

A DSE official said the securities regulator and the prime bourse are working on how to activate the OTC market.

The total market capitalisation of the OTC market stood at Tk 9.13 billion as of Thursday, while total number of shares in the OTC market is 562.23 million.

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