A special fund worth Tk 100 billion is to roll on bourses along with measures for increasing institutional participation in stock trade as per a consensus between the regulator and market operators.
The Bangladesh Securities and Exchange Commission (BSEC) and the associations of market operators Wednesday reached the decision in principle in a meeting held at the BSEC office to work out market-boosting means.
Representatives of Bangladesh Merchant Bankers Association (BMBA), DSE Brokers Association (DBA), Association of Asset Management Companies (AAMC) and Capital Market Stabilisation Fund (CMSF) attended the meet chaired by BSEC commissioner Prof Shaikh Shamsuddin Ahmed.
"We sat to discuss the possible ways of enhancing the liquidity support for the stock market. We have agreed in principle on formation of the special fund worth Tk 100 billion," said the BSEC commissioner, Mr Ahmed.
He said the procedures and mode of operation of the fund would be figured out later.
On March 21, the BMBA mooted a proposal regarding the formation of special fund by issuing bonds through the CMSF.
Wednesday's meeting was held as part of BSEC's continuous effort to ensure increased institutional participation in the stock market as a counterweight against market volatility.
The securities regulator on Tuesday sought the support of the insurers' regulator in facilitating the listing of 26 insurers alongside ensuring their stipulated investments in listed securities.
Mohammad Rezaul Karim, a BSEC executive director, says the market operators and the securities regulator Wednesday also reached a consensus on enhancing participation of institutional investors during Ramadan to stabilise the country's stock market.
"The representatives of the BMBA assured of injecting fresh funds worth around Tk 2-3 billion through the own portfolios of merchant banks during Ramadan," Mr Karim adds through an audio message.
He said the representatives of DBA also told the meeting that the stockbrokers would also support the market through injecting around Tk 10 million by each stockbroker through their own portfolios.
"The representatives of AMCs said they had already played a vital role in supporting the market through the investment made through the own portfolios of mutual funds," says the BSEC executive director, Mr Karim.
And the representatives of the AMCs also pledged to continue their support for the stock market during the holy month of fasting and festivals.
"We hope the market will witness more liquidity support during this Ramadan compared to previous Ramadan," Mr Karim adds.
Asked, BMBA president Md. Sayadur Rahman said the securities regulator took into account their proposal regarding the formation of the special fund worth Tk 100 billion.
"The securities regulator is working on our proposal. The main objective of the meeting was to discuss the ways of enhancing liquidity support for the market," Mr. Rahman adds.
The DBA said the stockbrokers would increase their participation in the market.
"We have told the meeting that the merchant bankers will ensure the liquidity support worth Tk 1.0-1.5 billion for the stock market," said the BMBA president.
AAMC president Dr Hasan Imam, DBA president Richard D Rozario and CMSF chief operating officer Md Monowar Hossain attended the meeting.