পূঁজিবাজার সংস্কারে করণীয় | Business Mirror | Ep 127

Introduction

Recently, the Dhaka Stock Exchange Brokerage Association voiced strong support for the establishment of a task force aimed at reforming the capital market in Bangladesh. The discussion, led by Mazharin Khan, included notable guests Mohammad Furkan Uddin, a Chartered Accountant, and Saiful Islam, President of the Association. The deliberations focused on the pressing need for capital market reforms, highlighting historical negligence that has persisted over the last 15 years.

The Need for a Task Force

The association proposed forming a task force that would systematically identify issues facing the capital market and devise actionable reforms. The rhetoric emphasized that despite Bangladesh's economic growth, the capital market has stagnated, and an A to Z analysis is necessary to understand why the desired growth has not materialized. It was suggested that current regulatory bodies, particularly the Bangladesh Securities and Exchange Commission (BSEC), need structural reform and a shift in mindset to become more proactive.

Understanding the Issues

The lack of new company listings in the market over the last 15 years was highlighted as a primary concern. Engaging large companies has proven challenging, with liquidity and market depth being significant deterrents. The imbalance in the capital market, where both supply and demand are not optimally addressed, has led to misperceptions among stakeholders.

Concerns were also raised about the regulatory framework that governs loan financing, with calls for a clearer distinction between capital market and banking activities. The task force would seek to address these regulatory challenges comprehensively.

Historical Context and Future Directions

There was a strong analogy made between the necessity of reforming the capital market and historical periods of financial crises, including those in 1996 and 2010. The success of reform is contingent upon addressing past irregularities and instilling a culture of accountability and transparency. To foster confidence in the capital market, assured responses from governmental figures were deemed vital.

Financial empowerment, particularly for the banking sector, was discussed. The viewed inefficiencies in the banking system pose significant risks and inhibit industrial growth in the capital market.

Proposed Solutions

To reinstate confidence, it was suggested that:

Independent regulation for Chief Financial Officers (CFOs) must be implemented to ensure accountability.
Better monitoring and enforcement of corporate governance regulations to promote transparency.
Stakeholder discussions should be prominent in designing reforms, ensuring collective input on future policies.

The conversation concluded with the acknowledgment of foreign investments now beginning to show promise but emphasizing the necessity of local reforms to match this interest.

Conclusion: The Way Forward

In summation, the capital market requires a meticulous approach, prioritizing stakeholder engagement and adaptable governance. With proactive measures and collective honesty, stakeholders believe that real reform could occur within three years.

Keyword

capital market, task force, reforms, Dhaka Stock Exchange Brokerage Association, regulatory framework, transparency, accountability, CFO independence, foreign investment.

FAQ

Q1: What is the primary focus of the task force suggested by the Dhaka Stock Exchange Brokerage Association?
A1: The primary focus is to identify the issues afflicting the capital market and suggest actionable reforms.

Q2: Why have new companies not been listed in the capital market for the past 15 years?
A2: The lack of new listings is attributed to issues of liquidity, market depth, and misperceptions regarding the market conditions.

Q3: What role does the Bangladesh Securities and Exchange Commission (BSEC) play in capital market reforms?
A3: The BSEC serves as the primary regulatory body, and a reform in its structure and approach is deemed essential for meaningful capital market development.

Q4: What historical events are cited as examples of why capital market reforms are necessary?
A4: The financial crises of 1996 and 2010 are referred to, highlighting the urgency of addressing past irregularities while planning for the future.

Q5: What are the proposed solutions to restore confidence in the capital market?
A5: Solutions include enforcing independent regulation for CFOs, enhancing monitoring of corporate governance, and ensuring stakeholder discussions in policy formulation.