Experts stress demutualisation of stock exchanges
3/24/12
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Though it is a vast job, they said, it will not be difficult to implement if the parties involved in the process have willingness.

Demutualisation of a stock exchange transforms it from an entity owned by mostly brokerage-owning members into a for-profit company owned by shareholders and segregation of ownership rights and trading rights. It ensures a sound corporate governance, alternative business models and operational efficiency.

They suggested formation of a taskforce with the representation of multidisciplinary professionals to recommend methodology to the policymakers for execution and a concrete roadmap for that.

“Let’s work together…we can mutually complete the demutualisation process…Bangladesh will have a better story to tell the world about Bangladesh’s capital market within the next 10 years if it’s implemented,” Securities and Exchange Commission (SEC) member M Arif Khan told the seminar.

About the notion that businesses will be affected, he said, “This is not true… after the demutualisation, the business volume will increase by many folds instead, as both the companies and investors will be more confident.”

The Institute of Chartered Accountants of Bangladesh (ICAB) arranged the seminar, titled ‘Demutualisation of Stock Exchanges: Rationale,
Country Practices and Road Map for Bangladesh’, at its auditorium.

Former Bangladesh Bank governor Dr M Farashuddin spoke at the
function as the chief guest while SEC member M Arif Khan attended it
as special guest. Former ICAB president Dr Jamal Uddin Ahmed
presented the keynote paper.

Chittagong Stock Exchange (CSE) president M Al Maruf Khan, ICAB
president M Syful Islam and vice president M Abdus Salam, among
others, spoke at the seminar held with former president ASM Nayeem in
the chair.

Speaking on the occasion, Dr Farashuddin said, “There’s no
alternative to transparency and good governance in the stock
exchanges…there should be a timeframe and specific roadmap
identifying segments of task to implement the demutualization
programme.

He suggested the SEC to seriously look into the omnibus account issue
and resolve the problems and urged the market regulator to give high
priority to the e-trading which has been delayed.

An omnibus account is a stock holding account that involves more than
10,000 investors and most big players chose omnibus accounts to
gamble in the market.

The former central bank governor also favored independent director
for the head of audit committee to ensure transparency in the company
audit report.

CSE president M Al Maruf Khan said, “Demutualisation isn’t a very
difficult job for the both bourses…the CSE members are ready to come
forward…we want to make sure that the investors’ interest is
protected and business is there.”

He said the Asian Development Bank (ADB) is supporting the government
for the demutualisation of the bourses. “There’re 12 principles that
are needed to abide by given by the ADB-based on international best
practices.”

Presenting paper at the seminar, Jamal Uddin Ahmed said the
demutualisation committee should not be formed with the people who
are part of problem. “For example, stock broker is part of the
problem faced by the capital market.”

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