Over 62,500 BO accounts closed in nine months amid market volatility

Amid persistent volatility in the equity market, as many as 62,552 beneficiary owners' (BO) accounts have been closed over the past nine months, reflecting investors' growing frustration and reduced participation.

According to data from Central Depository Bangladesh Ltd (CDBL), the number of active BO accounts stood at just over 1.29 million as of September 30, down from nearly 1.36 million at the beginning of the year.

The closures occurred despite the benchmark index of the Dhaka Stock Exchange (DSE), DSEX, recording a gain of 3.77 per cent or 197 points during the period.

Market insiders attribute the trend to declining investor confidence driven by erratic market behaviour and a prolonged absence of initial public offerings (IPOs).

"The market experienced frequent volatility over the past nine months, which discouraged active investor participation," said S M Galibur Rahman, Head of Research and Strategic Planning at Shanta Securities. "Subsequently, a good number of BO accounts also were closed by many frustrated investors."

Market swings weigh on sentiment

The DSEX began the year at 5,218 points, dipped to 4,664 on July 3 -- marking a nearly 10 per cent drop -- before recovering to 5,631 on September 3, and finally settling at 5,415 at the end of September.

During this period, market participation declined significantly. Daily turnover remained below Tk 3 billion for many sessions, including a low of Tk 2.24 billion on June 4.

Stock brokers note a strong correlation between market performance and investor activity. CDBL figures further reveal that, although 300 new accounts were opened on September 30, the net number of active accounts declined by 2,132 that day, confirming the dominance of investor exits.

CDBL officials indicated that the actual number of closed accounts may be higher than reported due to ongoing adjustments in their system.

IPO drought a key contributor

A prolonged absence of initial public offerings (IPOs) is another major factor behind the decline. Historically, many investors open BO accounts to apply for IPO shares, but no IPOs have been approved for the past 21 months.

The last IPO approved by the Bangladesh Securities and Exchange Commission (BSEC) was for NRB Bank in December 2023. Since then, no new public issues have entered the pipeline.

After the fall of the previous government on August 5, 2024, a new BSEC leadership, headed by Chairman Khondoker Rashed Maqsood, assumed charge. The new commission has since focused on regulatory reforms rather than approving fresh IPOs.

The regulator is currently reviewing amendments to the Public Issue Rules, following recommendations submitted by the capital market taskforce in March 2025. Though public opinion was sought in April, the final rules have not yet been implemented, delaying new IPOs.

Historical trend shows correlation

Data from recent years further illustrates the correlation between market performance and BO account numbers.

In 2024, when the DSEX declined by 16.44 per cent, 132,533 BO accounts were closed. In contrast, during the market rally in 2020, which saw the DSEX rise by 21.31 per cent, a total of 211,017 BO accounts were opened.

The trend underscores how both market conditions and IPO activity significantly influence investor participation in Bangladesh's capital market.

Analysts say unless stability returns and IPO activity resumes, investor participation is likely to remain subdued in the coming months.

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