Reviving Bangladesh's struggling mutual fund industry is one of the top priorities of the Bangladesh Securities and Exchange Commission (BSEC) as part of a broader reform agenda aimed at restoring investor confidence and building a more vibrant capital market, said BSEC Chairman Masud Khan.
The initiative forms part of a sweeping reform agenda unveiled by BSEC Chairman Masud Khan, which also includes plans to halt trading in non-operational companies, introduce T+1 settlement, simplify initial public offerings (IPOs), ease margin lending rules, strengthen the mutual fund industry and deepen the bond and derivatives markets.
Speaking at the "CMJF Talk" organised by the Capital Market Journalists Forum (CMJF) in Dhaka on Thursday, Mr Khan said the regulator had been given full independence to implement reforms and transform the country's capital market.
He said the regulator wants to encourage retail investors to invest through professionally managed mutual funds instead of directly buying individual stocks, while also introducing licensed financial advisers, simplifying the IPO process, expanding direct listing opportunities for private companies and making capital market regulations more investor-friendly.
"The economy cannot move forward sustainably without a vibrant capital market. Restoring investor confidence and carrying out long-term structural reforms are now our top priorities," he said.
Mr Khan said the commission also plans to introduce a licensing and certification framework for financial advisers based on international standards to improve the quality of investment advice available to retail investors.
Referring to his decision to lead the securities regulator, Mr Khan said he had initially declined the offer because of concerns over the reputation of the commission.
"I was initially reluctant to take this job because this is a place where almost everyone leaves with a tarnished reputation," he said. "Later, I was assured by the government's top leadership that I would have complete independence in carrying out my responsibilities. After discussing it with my family, I decided to accept the challenge in the national interest."
He added that shortly after assuming office, the commission took several key decisions, including removing the long-standing floor price mechanism, taking measures to restore foreign investor confidence and addressing issues related to the global depositary receipts (GDRs) of Bangladeshi companies listed overseas.
The initiatives form part of a broader reform programme that the regulator believes will help modernise Bangladesh's capital market, improve governance and attract long-term domestic and foreign investment.
The BSEC chief said the commission had already delegated more authority to the stock exchanges to enable real-time regulatory action.
Previously, the Dhaka Stock Exchange (DSE) had to seek BSEC approval before taking action against abnormal price movements or suspicious trading activity, allowing irregularities to continue for longer periods.
"We have empowered the stock exchanges to take immediate action and also given them the authority to determine circuit breakers. Such deregulation is essential for a more efficient market," he said.
"There is no other market in the world where shares of closed companies continue to be traded as they are in Bangladesh," Mr Khan said, adding that the regulator would take necessary steps to end the practice.
Mr Khan said cumbersome listing procedures discourage fundamentally strong companies from raising funds through the capital market.
The regulator also plans to expand direct listing opportunities.
Currently, only state-owned enterprises can be directly listed by offloading at least 25 per cent of their shares. Under the proposed reform, private companies would also be allowed to list directly by offloading just 10 per cent of their shares.
The move could pave the way for leading companies such as Unilever Bangladesh and Incepta Pharmaceuticals to enter the stock market without going through the conventional IPO process.
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