BANGLADESH STOCK MARKET

AN OVERVIEW OF ITS OPERATIONS,

OPERATIONS, SUCCESSES AND FAILURES

2

BANGLADESH STOCK MARKET

STOCK EXCHANGES IN BANGLADESH

MANAGEMENT OF STOCK

EXCHANGES

MAJOR FUNCTIONS OF

STOCK EXCHANGES

MARKET PERFORMANCES & PRODUCTS OF

STOCK EXCHANGES

LISTING PROCESS AT

STOCK EXCHANGES

TRADING SYSTEM AT

STOCK EXCHANGES

SECURITIES EXCHANGE

COMMISSION (SEC)

CENTRAL DEPOSITORY BANGLADESH

LIMITED (CDBL)

BANGLADESH STOCK MARKET EFFICIENCIES

BANGLADESH STOCK MARKET

SUCCESSES

BANGLADESH STOCK MARKET

FAILURES

TOPICS TO BE COVERED

3

BANGLADESH STOCK MARKETMarket for long term fund – cash flow from savers to borrowersOne of smallest markets in Asia and third largest market in South Asia

Mission of Bangladesh Stock Market• To create an efficient and transparent Market facilitating entrepreneurs• To raise capital, so that it accelerates industrial growth• To contribute on the overall benefit of the economy of the country

Visions of Bangladesh Stock Market• Regulating the market structure • Continuous promotion of stock investment • Expansion of trading network • Create opportunity to cross border trading

Two Automated Stock Exchanges• Dhaka Stock Exchange Ltd. (DSE)• Chittagong Stock Exchange Ltd. (CSE)

4

Different Markets • Primary Market• Secondary Market

Financial Regulators:• Securities & Exchange Commission (SEC)• Bangladesh Bank

Legal Regulations & By-laws • Securities and Exchange Ordinance - 1969,• Securities & Exchange Rules- 1987 • The Companies Act - 1994 • Securities & Exchange Commission Act – 1993

Only Central Depository in Bangladesh• Central Depository Bangladesh Limited

Academic Institution devoted to Stock Market• Bangladesh Institute of Capital Market (BICM)

BANGLADESH STOCK MARKET (CONT.)

5

Listing of Companies. Providing the screen based automated trading of listed

Securities. Settlement of trading. Gifting of share / granting approval to the

transaction/transfer of share outside the trading system of the exchange.

Market Administration & Control. Market Surveillance. Publication of Monthly Review. Monitoring the activities of listed companies. Investors grievance Cell. Investors Protection Fund. Announcement of Price sensitive or other information about

listed companies through online.

MAJOR FUNCTIONS OF STOCK EXCHANGES

6

BANGLADESH STOCK MARKET OPERATIONS

Stock Market Transactions

When you buy, you buy from another personWhen you sell, you sell to another personThe stock exchange itself neither buys, sells, nor sets pricesThe exchange provides the marketplace

Types of Brokers

1.Commission House Broker2.Floor Broker

7

BANGLADESH STOCK MARKET OPERATIONS

Online Trading

8

BANGLADESH STOCK MARKET OPERATIONS

Types of Trading OrdersPrice limits

1.Market order2.Limit order3.Stop order4. Stop limit order

Time limits 1.Day order2. Open order 3.Fill or kill4. Immediate or cancel

Trading and Settlement DatesConfirmation statements Trading dateSettlement date

9

Objectives of Bangladesh Stock Market

• Develop a strong platform for entrepreneurs for raising capital;• Provide an investment opportunity for small and large investors;�• Develop a transparent market ensuring investor's interest;�• Provide a fully automated trading system with most modern amenities to �

ensure: quick, easy, accurate transactions and easily accessible to all;• Attract non-resident Bangladeshis to invest in Bangladesh stock market;• Attract foreign institutional investors to invest in Bangladesh;�• Collect, preserve, disseminate data and information on stock exchange�

Are these objectives achieved or being achieved ???

But, Bangladesh Stock Market survived in recent world economic recession with minimum impact.

BANGLADESH STOCK MARKET SUCCESSES

10

Are these objectives achieved or being achieved ???

But, Bangladesh Stock Market survived in recent world economic recession with minimum impact.

BANGLADESH STOCK MARKET SUCCESSES

• Attract non-resident Bangladeshis to invest in Bangladesh stock market;

• Attract foreign institutional investors to invest in Bangladesh;�• Collect, preserve, disseminate data and information on stock �

exchange

11

BANGLADESH STOCK MARKET SUCCESSES

BANGLADESH STOCK MARKET FAILURES

STOCK MARKET CRASHES The objective of this section is to provide knowledge to the

readers about typical stock market crashes and its causes of

‘Bull Run’. In addition factors for crashes and role of different

market participants including regulators before, during and after

the crashes. Two different crashes will be introduced from

international perspective (American) which is stock market

crash of 1987 and Bangladesh stock market crash of 1996.

Bangladesh Stock Market Crashes

• Bangladesh Share Market Scam 2010-11

BANGLADESH STOCK MARKET FAILURES

Figure 1: Daily DGEN of January, 2011 index

14Figure 2: DGEN Graph (Source: Dhaka Stock Exchange)

BANGLADESH STOCK MARKET FAILURES

Bangladesh Share market Crash 1996

15

Reasons behind these Debacles: •Rumor based trading•Lack of transparency in BO accounts•Syndicate•Lack of knowledge in Investors•Lack of govt. control•Manipulation•Rapid withdrawals of funds•Emergence of Multi level Marketing Businesses

BANGLADESH STOCK MARKET FAILURES

16

Thank you

Any Question ???