Existing infrastructure not supportive to resume stock trading

Existing infrastructures and limited banking service do not support the continuation of trading in the capital market amid ongoing lockdown enforced by the government to contain the spread of COVID-19.

The officials of the Bangladesh Securities and Exchange Commission (BSEC) said this following some criticisms raised in home and abroad over the prolonged closure of trading in the country's capital market.

"The automation of our stock exchanges are lagging behind that of other countries which have continued trading amid outbreak of COVID-19," said Mohammad Saifur Rahman, the spokesperson of the securities regulator.

Presently, trading remained closed only in three stock exchanges across the globe. The stock exchanges are Dhaka Stock Exchanges (DSE), Chittagong Stock Exchange (CSE) and Colombo Stock Exchange (Sri Lanka).

On March 23, the DSE and CSE closed the trading activities till April 4 following public holiday announced by the government to contain infection of the coronavirus, the deadly disease which claimed about 0.27 million lives across the world so far.

Later, the exchanges extended the closure of their operation till April 25 as the government prolonged the ongoing public holiday.

Mark Gordon-James, Investment Director, Aberdeen Standard Investments, an international institutional investor recently criticised the DSE for the prolonged closure of trading on the bourse.

"The indefinite closure of the DSE and BSEC's circular in March that prevents stock prices falling below their five day average have wrought significant damage to your market's reputation," Mark Gordon-James said in a statement.

Following this statement, the BSEC executive director Mr. Rahman said the ongoing limited banking service is also not enough to complete settlement of daily transactions to be executed through stock exchanges.

Meanwhile, Minhaz Mannan Emon, a DSE director, said that some complexities including the closure of the BSEC office hinder the continuation of the trading on the capital market.

In this regard BSEC executive director Mr. Rahman said the securities regulator has no problem to provide necessary support to continue transactions in the capital market.

"The BSEC can provide its support required to continue the transactions keeping only its surveillance department open," said Rahman, also a BSEC executive director.

He said the government has deployed its all-out effort to disperse public gathering fearing infection of coronavirus.

"Under such a situation, investors can gather in the trading floors if trading is resumed. Who will take the responsibility if someone is affected with the deadly virus?" said the BSEC executive director Mr. Rahman.

He also said most of the investors of the stock exchanges in other countries are able to conduct transactions through mobile apps.

"The number of our investors who use mobile app to conduct transactions is very insignificant. So it is not possible to continue transactions in the capital market amid the ongoing situation?" Rahman said.

The premier bourse DSE on March 9, 2016 launched the mobile-based share trading app.

But the number of mobile app users still remains very insignificant compared to total number of BO (beneficiary owner's) accounts.

The number of active BO accounts stood at above 2.58 million at the end of 2019.

On the other hand, the number of active users of the DSE mobile application stood at only 51,199 on December 30, 2019, the last trading day in 2019.

Apart from executing buy and sale orders, the app provides some featured information, including buy or sell alerts, notifications and portfolio status to the investors, which are not easily available on the website or via brokers' services.

Some insiders said the number of mobile app users is yet to be satisfactory as many brokers have not promoted the service.

"Investors who use mobile app are able to know instant information regarding buy-sell and portfolio status. The mobile app to ensure more transparency compared to transactions executed through the traders," the insider said.

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