stock markets in bangladesh

7/30/2019 Stock Markets in Bangladesh

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I N T E R N S H I P R E P O R T

Md.Yousuf Chowdhury

The primary market is where capital is actually raised by thecompany selling stock to investors. Company in a separate arena fromthe stock market performs the capital raising function. The stockexchange is a trading vehicle place where buyers and sellers arebrought together. All profits and losses go directly to the investors, lesscommissions and fees. The stock market is structured t provideliquidity and marketability to the securities industry. It is a worldwidesystem designed to bring buyers and sellers together. Companyowners and stockholders, whether part of management, venturecapitalists or investors, need a way of turning their stock certificatesback into cash. The stock market provides this opportunity. It is thiskind of liquidity that makes investing in stocks attractive. Stock pricesare set by supply and demand. It is an auction market, whereinvestors, through their intermediaries-brokers bid for stock at a price

they feel is fair at the time. The market provides a ready market forstocks. With a simple phone call, an investor can buy or sell stock,virtually in minutes.

A nationwide user-friendlycentral depository system (CDS)has also been brought into. AtCSEs taking the first stem,securities and exchangecommissions of Bangladesh hasformed a committee to developan appropriate legal framework

for the central depositorysystem. Considering theimportant role of CSE on thedevelopment of capital market ofBangladesh, an attempt has beenfabricated in this paper to studythe simultaneous practices ofstock trading in Chittagong byCSE. Although various researchworker had been fabricatedabout various topics of CSE, avery few have been taken toanalyze the overall operationalaccomplishment and theprofitability of Chittagong stock

exchange (CSE).

The stock exchange is asecondary market, tradingmarket. And

Chittagong

Stock

Exchange.

A S H O R T NOT E ON S TOCK MARKE T

1

The stock market is an essential part of capital market. The economyof a country largely relies on a strong capital market supported by avibrant stock market. Contribution of any stock exchange generallyleads to the economic growth by stimulating the funds to financeindustry and other enterprises and changing the savings to industriesand other productive activities. The existence of a stock markefacilitates listed companies to raise additional capital quickly andcheaply as they enjoy reputation. Bangladesh emerged as anindependent country in the year 1971. But till now, the industriadevelopment of Bangladesh is still insolvent and for swifindustrialization, formation of capital is the most significantcomponent. But it is easy to procure through capital market withproper support of stock market. Bangladesh stock market has seen arapid growth in the recent years. Initial public offerings (IPO) areincreasing and foreigners are also increasingly showing interesresponding to the governmental policies and development in the stockexchanges. At present, their are two stock exchanges, in both theexchanges, trading is done through automation system- a newtechnologically developed system for stock trading. By introducing thissystem, both the exchanges increased their role in the overaldevelopment of capital market or the country. The Chittagong stock

exchange (CSE) has been established in 1995 as model of internationastandard. A complete automation project of CSE is on full sway.


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The Chittagong Stock Exchange (CSE)began its journey in 10th October of

1995 from Chittagong City through thecry-out trading system with thepromise to create a state-of-the artbourse in the country.

Founder members of the proposed ChittagongStock Exchange approached the BangladeshGovernment in January 1995 and obtained thepermission of the Securities and Exchange

Commission on February 12, 1995 forestablishing the country's second stockexchange.

The Exchange comprised of twelve Boardmembers, presided by Mr. Amir Khosru MahmudChowdhury (MP) and run by an independentsecretariat from the very first day of itsinception. CSE was formally opened by thenHon'ble Prime Minister of Bangladesh onNovember 4, 1995.

The mission of the CSE is to create oneffective, efficient and transparentmarket of international standard to saveand invest in Bangladesh in order tofacilitate the competent entrepreneur to

raise capital and accelerate industrialgrowth for overall benefit of theeconomy.

The Chittagong Stock Exchange believesthat a dynamic, automated, transparentstock exchange is needed in Bangladesh.It works towards an effective, efficientand transparent market of internationalstandard to serve and invest inBangladesh in order to facilitate thecompetent entrepreneurs to raise capitaland accelerate industrial growth foroverall benefit of the economy and keep

pace with the global advancements.

Missions

Chittagong

Stock

Exchange.

ABOUT CSE

Background

Vision:

The visions of CSE are as follows:

a) To develop a strong platform for raising capitalb) To provide an investment opportunities for the investor

c) To develop a corporate culture through mandatory corporate membership

d) To develop a transparent market ensuring investors interest

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Md.Yousuf Chowdhury

Chittagong

Stock

Exchange.

e) To expand the capital market

f) To collect, preserve and disseminate data and information on stock market

g) To provide a fully automated trading, clearing and settlement system to ensure quick,

easy, accurate and easily accessible to all transactions

h) To make interest about Bangladesh stock market for the non-resident Bangladeshis toinvest in this market

i) To develop a research sell for analyzing status of the market and economy

j) To attract the investors for getting membership of SEC

k) To ensure smooth customer service and truncation

l) To achieve goodwill

m) Total necessary steps for increasing customers.

3

Objectives

Develop a strong platform for entrepreneurs raising

capital;

Provide a fully automated trading system with mostmodern amenities to ensure: quick, easy, accurate

transactions and easily accessible to all;

Undertake any business relating to the Stock Exchange,

such as a clearing house, securities depository center or

similar activities;

Develop a professional service culture through

mandatory corporate membership;

Provide an investment opportunity for small and large

investors;

Attract non-resident Ban ladeshis to invest in


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Md.Yousuf Chowdhury

BOARDS OF DIRECTORS

Legal base of CSE

As legal entity CSE is a not-for-profit public

limited company. All of its 129 members are

corporate bodies. It has a separate secretariat

independent of policymaking Board. TheBoard comprises of brokers and non-brokers

directors with equal proportion to ensure thetransparency.

The Board constituted Committees to delegate

such functions and authority as it may deem

fit. There is an independent secretariat headed

by a full time Chief Executive Officer. CSE

activities are regulated by its own regulations

and bye laws along with the rules, orders and

notification of the SEC.

Chittagong

Stock

Exchange.

4

Sl. No.Name of the Directors Designation Elected/non

-elected

1 Mr. MKM Mohiuddin President Elected

2 Mr. Nasiruddin Ahmed Chowdhury Vice -President Elected

3 Mr. Fakhor Uddin Ali Ahmed Vice -President Elected4 Mr. A.Q.I. Chowdhury, OBE Vice -President Elected

5 Mr. Abu Sayed Md. Shahidullah Director Elected

6 Mr. Al Maruf Khan Director Elected

7 Mr. A.S.M. Nayeem Director Elected8 Mr. Bijon Chakroborty Director Elected

9 Mr. M. Salman Ispahani Director Elected

10 Mr. Murshed Murad Ibrahim Director Elected

11 Mr. Syed Mahmudul Huq Director Elected

12 Mr. Tareq Kamal Director Elected

13 Dr. A. Majeed Khan Director Non-Elected

14 Prof. Abu Ahmed Director Non-Elected

15 Engr. Ali Ahmed Director Non-Elected

16 Mr. Amir Humayun Mahmud Chowdhury Director Non-Elected17 Mr. Anis A. Khan Director Non-Elected18 Mr. Farooq Sobhan Director Non-Elected

19 Mr. Mamun Rashid Director Non-Elected

20 Mr. Md. Sarwar- E- Alam Director Non-Elected

21 Prof. Rabiul Husain Director Non-Elected

22 Mr. Mohd. Safwan Choudhury Director Non-Elected

23 Mr. Waliur Rahman Bhuiyan Director Non-Elected

24 Mrs. Yasmeen Murshed Director Non-Elected

25 Mr. A.B.Siddique Director Ex-officio


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The CSE Board of Directors is

comprised of a maximum of 25members, of whom the GeneralBody of the Exchange elects 12and Securities and Exchange

Commission nominates 12. TheBoard elects its own President

and 3 Vice- Presidents. TheChief Executive Officer of CSE

is an ex-officio member of theBoardThe core responsibility of theBoard is to frame the CSE

policies and supervise theExchange's operations:

MANAGEMENT TEAM

Chief Executive Officer: The CEO is responsible for implementing the decisions of the Board, the day to day running

of the exchange and formulating strategic plans for agreement with the board.

Functional department

Corporate department Market operations Compliance department System department Finance department

R & Ddepartme

nt

Clearing andsettlement

Membership

Listing

Inspection

Surveillanc

e

Chittagong

Stock

Exchange.

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Md.Yousuf Chowdhury

Chittagong

Stock

Exchange.

CORPORAT E D E P AR TME NT

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This department carries out the following functions:

Maintain library contents

Press cuttings and press relations

Produce portfolio and other CSE publications Public relations

Investor's information cell

To fulfill the need, CSE has been publishing a monthlybulletin named market update since from its verybeginning. From November 1997 this monthly bulletinwas replaced by its upgraded version under a new titlePortfolio. Portfolio is publishing regularly withincreasingly better content, sharp analysis and greaterquality. In the year 2000 CSE decided to publishPoprtfokio quarterly instead of monthly. Anothermonthly publication is newsletter in Bengali.

These library contains international newspapers,journals, stock market related books, publications,listed companies information, CD-rom, video cassettes,annual report of different stock exchange and of

course, different course related books of differentcategories. The library has been steadily expandingwith accession of more books and periodicals, althoughits user has not been increasing.

The CSE market transaction data are regularly updatedin every 2 hours on this web site, which includes thecurrent issues of the Portfolio. CSE also update its website time to time, especially when any change tookplace.

Research, Corporate Development &Information:

Chittagong

Stock

Exchange.

Portfolio:

Library:

Web site:

C LEAR ING & S ETTLEMENT

7

Research and publications are essentialpre-requisites for effective functioningand development of any stock

exchange.

CSE has developed and maintaining aspecialized and well furnished libraryfor the use of the members, brokers,dealers, executives as well as studentsto fertilize the education know-how.

CSE has an excellent and attractiveweb-site containing CSE history, rulesand regulation, information regardingtrade, listed companies, financialinformation and so on, for the netbrowsers.


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Md.Yousuf Chowdhury

The selling members deliver the

securities to the Clearing House on the

pay-in day in case of physical

settlement and make available the

required securities in the clearingaccounts maintained with CDBL in case of

dematerialized securities. Members are

required to open clearing accounts with

depository participants of CDBL.

The Clearing House delivers the

securities certificates to the buying

members on the pay-out day and CDBL

credit the required securities to the

buying members clearing account in case

of dematerialized securities if there is

no receivable money pending.

Settlement of transaction offoreign buyer and/or seller

involving a custodial bank

is done directly between the

members through the

custodial bank with

intimation to the clearing

house.

Chittagong

Stock

Exchange.

SPECIAL SETTLEMENT REQUIREMENTS FOR

FOREIGN INVESTOR INVOLVING

CUSTODIAN BANK

FAILED TRADES:

If a member fails to deliver securities or make payment on the settlement day, the stock exchange

automatically auctioned the unsettled transaction on the risk and account of the defaulting member.

No prior notice is given. The defaulting member is not allowed to carry out trading from the day

after settlement day until payment of the outstanding money and a fine as decided by CSE.

The Clearing House receives cheques from the buying member on the pay in day and the selling member received

cheques from the Clearing House on the pay-out day if there are no receivable securities pending.

CATEGORY WISE SETTLEMENT SYSTEM AND SETTLEMENT CYCLE

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Md.Yousuf Chowdhury

Chittagong

Stock

Exchange.

Pay and pay out day for Spot order transactions of all categories of companies are T+0 and T+1 respectively.

Direct settlement of foreign buyer and/seller shall be within T+5 and intimation thereof to CSE within T+6

[Notes: T stands for Trading day;]

MARKET OPERAT ION

10

Categor

y

Criteria Settlement System Settlement Cycle

A Mutual Fund, Regular AGM, Declared and

paid at least 10% dividend within sixty days

from the date of declaration and Submission

of compliance re thereof to SEC within seven

working days from the date completion of

disbursement

Netting for payment obligation and

trade for trade for securities

obligation

Pay in day = T+1

Pay out day = T+3

B Regular AGM, Declared and paid Dividend

less than 10% and Submission of thecompliance Report to SEC within the time

limit

Trade for Trade for both securities

& money obligation

Pay in day = T+ 1

Pay out day=T+3

G Greenfield companies Trade for Trade for both securities

& money obligation

Pay in day = T+ 1

Pay out day=T+3

N All newly listed companies except Greenfield

companies


& money obligation

Pay in day = T+ 1

Pay out day=T+3

Z Irregular AGM or Declared no dividend at all

or declared dividend but failed to pay it off or

Submission of the requisite compliance report

to SEC within the time limit or Not inoperation for six months, or Accumulated loss

after adjustment of reserve, if any, is negative

and exceeded its paid-up capital excluding

those who declared dividend.


& money obligation

Pay in day = T+3

Pay out day = T+7


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Monitor public information

Monitor, receive and disseminate regular company

information

On-line surveillance

Inspection visits to members

Receive and disseminate price sensitive company

information

Receive and manage investor complaints

Receive and manage other complaints

Manage and monitor OTC facilities

In terms of the matching process, there aretwo methods:1. Orders are sorted and matched withopposite orders of the best price. Waitingorders are automatically in the followingsequence keeping the system fair andtransparent:

Best Price

Within Price, by time priority.

The best buy order will match with the bestsell order. The best buy order for a seller isthe one with highest price and the best sellorder for a buyer is the one with lowestprice. An order may match partially withanother order resulting in multiple trades.

2. Orders are queued for matching at aspecified time at a single price.Subsequent to matching, trade confirmationsare sent to the respective workstations, whichcan be printed on-line. The system displaysscrip and market-related information requiredto support traders.

TRADING ORDERS

CSE trading system provides immense flexibility to the investors in

terms of kinds of orders that can be placed to trade. The system allow

the user to modify or cancel an order prior to execution.

The most frequently order on the CSE is the "limit order, which is an

order to buy or sell at a specific price. Conditions related to time can easily made into a limit order, which are as follows

A GTC order is the order that remains in the system

for a period not exceeding one calendar week or themember cancels it.

A GFD is the order, which is valid for the day on

which it is entered. If the order is not matched durin

the day, the order gets cancelled automatically at th

end of the trading day.

A GTD order allows the member to specify the

number of days not exceeding one calendar week fwhich the order shall stay in the stay in the system.

At the end of this period the order shall be deletedfrom the system.

GOOD

TILL

CANCELLED(GTC):

GOOD

FOR

DAY (GFD):

GOOD

TILL

DATE (GTD):

Chittagong

Stock

Exchange.

This department carries out the following functions:

TRADING SYSTEM

The Chittagong Stock Exchange was the first stock exchange in the country tointroduce automated trading system on June 1999. The trading system at CSE knownas CHITTRA connected major cities of Bangladesh enabling all members to trade nationwide simultaneously with ease and efficiency.

Order Matching Mechanism

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Market order

1

Drip Feed Order

2

Stop Loss Order

3

Match at Closing Price Order4

Spot Order

5

Odd Lot Order

6

Bulk lot order

7

Big Lot Order

8

Auction Order

9

Chittagong

Stock

Exchange.

In addition to limit order, the Exchange

has introduced other following types of

orders for the investors:

Market Order is an order to buy or sell a certain quantity of

particular security at the best price or prices prevailing in themarket at that point of time.

A Drip Feed Order is an order in which the member has the option

to specify a replenish quantity along with the total order quantity.

A Stop Loss Order allows the member to place an order, which

gets activated only when the market price of the relevant security

reaches or crosses trigger price. A stop loss order can be modifiedor deleted until it is not converted to a limit order.

A Match at Closing Price Order allows the Member to specify

order to be executed at Closing Price.

Members shall be allowed to carry out spot order on CSE systemarising out of closure of book or closure of the renunciation period

of listed Companies. A spot order is traded against another spot

order only.

Any share quantity, which is not a market lot or multiple of

market lots, shall be called Odd Lot. While matching the system

would match orders only if the quantity (odd) of the order is fully

satisfied by one of the opposite order.

Bulk lot orders are multiple of market lot orders, which contain

multiple numbers of certificates. Each of the Bulk lot order shall

match with equal quantity and best price. The minimum amount

for a bid of bulk lot for a certain security shall be Tk 0.5 (point

five) million at market price unless otherwise fixed by the Board

time to time with the approval of the SEC.

Big lots are multiple of market lots inscribed in one single

certificate. Each of the big lot order shall match with equal

quantity and equal or better price.

Auction Order shall be an order entered by CSE. The Exchange

will specify a rate with price brand for each security when puttingthe auction order. The auction orders entered by CSE cannot be

modified or deleted once the auction session has started.

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The trade takes place from Monday to

Friday except holidays declared in

advance by the Exchange.

The market timings of normal trading

session are:

The opening price of a

security shall be the price at

which maximum number of

securities is matched in

opening session.

Computation of closing price of scripts

The closing prices of scripts are computed on the basis ofweighted average price of all trades in the last 30 minutes

of the continuous trading session. However, if there is notrade during the last 30 minutes, the weighted average

price of maximum 50 (fifty) number of trades preceding

the above 30(thirty) minutes shall be taken fordetermination of closing price. In case there is no trade in

the security during the continuous trading session the

opening price of the security shall be treated as the closing

price.

Guidelines:

The following standard upward and

downward price limits are applicablefor A B G & N category

companies for each market days

However the above price limit will not be applicable in the following cases:

There is no price limit for Z category companies. Free trade of Z category is allowed for eachmarket day. However, for Z category shares Circuit Filter @10% is applicable and the circuit filter iscalculated on the basis of last traded price of the shares of this category during trading hours

A newly listed securities is allowed for free trade for first 5(five) consecutive market days.

Free trade is also allowed on the subsequent trading day of receiving price sensitive informationlike rights issue, bonus issue and dividend from the listed company. After the day, the price limit willbe applicable as usually.

Free trade is allowed on the first trading day subsequent to the record date from 12.00 noon tothe rest of the trading hours of the day due to closure of transaction resulting from record date/bookclosure date.

Chittagong

Stock

Exchange.

TRAD ING HOURS

Market Open: 09:40 hours

Market Closed: 14:30 hours

The system will also have sessions for Odd Lot, Spot and Auction sessions. These sessions however may take place simultaneouslywith the normal trading sessions or in a separate session after closing of normal trading session

OPENING & CLOSING PRICE CALCULATION

Previous days per share market price Limits

01. Up to Tk. 200 20% (Twenty Percent ) but not exceeding Tk.3502. Tk.201 to Tk.500 17.5% (Seventeen Point Five Percent ) but not exceeding

Tk.75

03. Tk.501 to Tk. 1000 15% (Fifteen Percent ) but not exceeding Tk.125

04. Tk.1001 to Tk. 2000 12.5% (Twelve Point Five Percent ) but not exceeding Tk.200

05. Tk.2001 to Tk.5000 10% (Ten Percent ) but not exceeding Tk.375

06. Tk.5001 and above 7.5% (Seven Point Five Percent ) but not exceeding Tk.600

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The CSE put in place a comprehensive risk management

system, which is constantly monitored to pre-empt any

trading failures. It collects margins from members toaddress the problems related to the volatile trading activities

as well as to settlement failure.

CSE imposes margin requirements on the members

additional trade exposure. Additional trade exposure meansthe amount of the aggregate (gross) trade exposure

exceeding the free limit for each member. Aggregate (gross)

trade exposure is computed on the total buys and total sales

position of a member at any point of time during a trading

day. The free limit on the amount of the gross trade

exposure to trade in CSE is taka one crore per trading day.

The member shall pay the margins in cash, bank guarantee

or FDRs etc. within one hour of exceeding the free limit on

the amount of the gross trade exposure. As per ChittagongStock Exchange (Members Margin) Regulations, 2000 therate of depositing the members margin with the clearing

house on the additional trade exposure are as follows:-

Exposure limit violationThe trading right of the members who exceeds the free limit

without depositing margin to CSE within the prescribed time

shall remain suspended.

Adjustment or refund of members margin:-The Exchange can realizes the value of the margin instruments

and adjusts the amount so realized if member fails to settle his

trade with the clearing house on the settlement day.

The member shall be liable to pay the shortfall, if any,

including the costs, interest, charges and expenses involved in

the realization process, within three days of the written notice

of demand issued to him by the Exchange.

Chittagong

Stock

Exchange.

MARG IN REQU I REMENTWITH CSE

14

ADDITIONAL TRADE EXPOSURE MEMBERSMARGINRA

TE

(a

)

Above taka one crore but not

exceeding taka two crore

@ 20%

(

b

)

Above taka two crore but not

exceeding taka three crore

@30%

(c

)

Above taka three crore but not

exceeding five crore

@50%

(d

)

Above taka five crore @100%


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Md.Yousuf Chowdhury

Chittagong

Stock

Exchange.

TRANSACT ION BY CL INT ON MARG IN

A member may provide broker service to its client on cash account and /or margin account basis. Client

who pays in full for the cost of the securities purchased uses cash accounts. Margin is buying securities on

credit while using those same or other securities as collateral for the loan. A client is authorized to borrow

part of an investments total purchase cost from their brokerage firm using margin accounts. Brokers have

policies and procedures to protect themselves from market risk, as well as credit risk. As per Margin Rules,1999 the member in no way extends credit facilities to its client until and unless the client maintains margin

account with the broker through a written agreement. The client needs to carefully review the margin

agreement provided by broker. The client shall deposit margin not later than seven days from the first date

of securities transaction in the form of cash, securities issued by the Government or its agencies, margin

able securities etc. The amount of the initial margin would result in the equity being not less than 150% ofthe debit balance in the account. Additional margin is required to be deposited if the account falls below

150% of the debit balance. The failure to do so may cause the broker to force the sale of or liquidate the

securities in the clients account in order to bring the accounts equity back up to the required level.

Your Risks Involved With Trading on Margin

As a client you may generally use margin to expand your

purchasing power. However it also run the risk there are a

number of risks that all investors need to consider in

deciding to trade securities on margin.

These risks include the following:

1. You can lose more funds than you deposit in the margin

account: A decline in the value of securities that are

purchased on margin may require you to provide additionalfunds to the broker that has made the loan to avoid the

forced sale of those securities or other securities in your

account.

2. The broker can sale of securities in your account: The

broker can sell the securities in your account to cover themargin deficiency. You will also be responsible for anyshort fall in the account after such a sale.

3. The broker can sell your securities without contactingyou: Some investors mistakenly believe that a broker must

contact them for a margin call to be valid. As a matter of

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How do we benefit you?

1. Automatic credit: All your purchases will be credited to yourAccount with just instruction. Added to this all the corporate actionlike bonus shares, shares under scheme of spilt, amalgamation, etc.,will be credited to your account automatically.2. Off market settlement: We carry out settlement of trades not doneon the stock exchanges (off-market trades).

3. Arrange Dematerialization & Rematerlization: We arrange toconvert the paper form of share certificates into electronic formthrough the process of dematerialization and convert the shares heldin electronic form into paper form i.e. Share Certificate(s) throughthe process of rematerialization.4. Transaction Statement: This monthly summary statement willshow opening balance, securities pending for Demat, transfers madeby you, credits received by you, quantity pledged or lent by you andthe closing balance for each security with appropriate description.5. Amendments to your profileIn case there is any change to the your personal profile like changeof bank A/c or change of address etc we will intimate all the companyin your portfolio regarding the change.

Given hereunder is a quick glance of the various milestones achieved by CSE as aDepository Participant.

FEES

As mentioned this is a value addition to our client. Hence

we have kept the cost very nominal. At the same time

maintaining our high standard of quality services that is

synonymous with our name.

Chittagong

Stock

Exchange.

good customer relations, most brokers will attempt to

notify their client but they are not required to do so.

4. You are not entitled to an extension of time to deposit

the margin: An extension of time to meet initial or

additional margin requirements may not be available toyou.

Please learn about the risks involved in trading securities on margin, and you should consult your brokers regarding any

matters they may have with your margin accounts.

DP SERVICE

CSE has opened Central DepositoryBangladesh Ltd. (CDBL). now it is

one of the Depository Participant (DP)of CDBL to give more Value AddedService for most esteems investors whoholds security in electronic form i.e.

YOU. Customer Services has alwaysbeen the prime focus and CSE attends

to the needs of the clients well on time.

ACCOUNT OPENNING

Similar to the brokers, who trade on yourbehalf in and outside the stock exchanges,

a depository participant is your

representative (agent) in the depository

system CDBL. The process of opening an

account with us is similar to the openingof a bank account. You require to sign an

agreement with us which will set out the

rights and duties of the both you and the

Exchange. Just like a bank branch, we will

maintain your securities account balancesand intimate to you the status of your

holdings from time to time. We will

dispatch the statement of holdings to you

periodically; however the statement of

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Md.Yousuf Chowdhury

INTERNET TRADING SERVICES

CSE is not only the pioneer of establishment of nationwide trading mechanism. It also extended its networkto the abroad by introducing Internet Trading System on 30th May 2004. You may h ave access to ourtrading network not only from the premises of our brokers but also from personal computers in your homethrough the Internet.Internet trading is available on CSE. The CSE network allows its user to use internet as an order routingsystem for communicating clients orders to the CHITTRA through brokers. Broker can provide this serviceto their client after obtaining permission from respective stock exchanges. CSE has stipulated theminimum conditions to be fulfilled by brokers to start Internet based trading services.

Agreement with a Broker:

As an individual investor you need to open anaccount with a broker. When you are willing to use

Internet Trading Facilities, you will need to fill in a

special ITS Account Opening Form. The Terms and

Conditions to be followed by you and your broker for

ITS, will be little different from the regular trading

account. All the Brokers are not eligible for ITS.

Please see in the relevant section of this website or

email to us for a list of brokers who can offer youITS. Although the form is available on the net, you

still need to fill in and submit to the chosen broker a

hard copy of the form duly filled in.

Passwords

When you open an account, your broker will prepare

your electronic file. Your profile will be accessible

by you only. Your Login Id and Password are those

that you provided in yourRegistration Form. We

strongly recommend you to change your passwordimmediately and from time to time for better security.

And remember the password when you change it.DO

NOT DISCLOSE YOUR PASSWORD TO

ANYBODY. Remember, if you give your password

willingly or unwillingly, he or she can place order

and nobody but yourself will be liable for all those

transaction.

Deposits with your brokers and your trade limit

Make sure that you and your Broker have signed the

Safe Keeping Agreement. Once you have the Safe

keeping agreement, you can deposit shares and

money to your Broker. According to your deposit, the

Broker will set limit of your trade. You may either

have a Cash Account or a Margin Account. Consult

your broker before you choose.

Cash Account and Margin Account

If you have a CASH account, brokers may set limit to the extent

you deposit. For Margin account the Margin Rules 1999 will be

applicable.

Placing your order

Your orders placed through this system, if passes the validation

test will be forwarded to the CSE Trading engine. In the tradingengine, orders are matched on price and time priority. ITS is not

accepting any market order. All submitted orders have to be

limit orderExecution of Trade

Once you place order in the CSE Trading Engine, it will be

queued to be matched with another opposite order according to

the Chittagong Stock Exchange Trading Regulations 1998

Trade Confirmation

When your order is matched with another order, i.e., trade is

executed, you will receive a confirmation note on e-mail. Theemail will be generated by the computerised system and will not

require any signature.Post Trade Settlement

Your Broker will receive a consolidated report from the

Exchange of your buy and sell at the end of business. It is the

responsibility of the Broker to settle for you.

Check your position - your own index

The ITS is not only a system to check market and place order.You will also be able to see current value of your stock. CSE

ITS will give you opportunity to have your Personal Index.Collection of money and share certificates from your brokers

Safe Keeping service of your Brokers

Your Broker is bound to make settlement to you by delivery of

good securities and/or payment by cheque "good for payment "

within one day of its receipt of securities and/or cheque from the

Clearing House. You may keep a provision in your Safe KeepingService Agreement for the arrangement of the share and money

collected by your Broker.

Chittagong

Stock

Exchange.

holdings can be sent to you as and when

requested for a fee.

Chittagong Stock ExchangeThe introductory offer prices are as follows

Account Opening Charges 250/= Inclusive of Tk.100 as adjustable amount

Custodial Charges .06% (60 paisa in per thousand taka), minimum Tk.3.50Demat Charges .0004 ( 40 paisa in per thousand taka), minimum Tk.7.00 and

transportation charge Tk.30/=

Remat Charges .15 ( 15 paisa in per share), minimum Tk. 110/=

Transaction Charges(Buy & sell) .0004 (40 paisa in per thousand Taka), minimum Tk. 7.00

Annual Maintenance Nil

Statement of Accounts Free of cost

Billing Cycle End of month

Closure Fee AC Closing fee Tk. 50/=

1. Fees schedule are based on existing CDBL charges and may be changed at our discretion.

2. Additional statement will be charged Tk. 10/- per statement.

3. Service tax and other levies would be extra as applicable.

We intent to make your investment as easy as possible & simple too.

:: Procedure for Internet Trading ::

17
http://opentrddemo%28%27margin_rules.html%27%29/https://www.bangladeshstockmarket.com/i2_n.shtmlhttps://www.bangladeshstockmarket.com/i2_n.shtmlhttp://www.bangladeshstockmarket.com/UserRegistration?action=UserRegistrationFormhttps://www.bangladeshstockmarket.com/proc_n.shtml#accshttps://www.bangladeshstockmarket.com/proc_n.shtml#accshttp://opentrddemo%28%27margin_rules.html%27%29/http://openglossary%28%27glossary/m.html#m6')http://openglossary%28%27glossary/l.html#l6')https://www.bangladeshstockmarket.com/i12_n.shtmlhttps://www.bangladeshstockmarket.com/i12_n.shtmlhttp://opentrddemo%28%27margin_rules.html%27%29/http://openglossary%28%27glossary/m.html#m6')http://openglossary%28%27glossary/l.html#l6')https://www.bangladeshstockmarket.com/i12_n.shtmlhttps://www.bangladeshstockmarket.com/i2_n.shtmlhttp://www.bangladeshstockmarket.com/UserRegistration?action=UserRegistrationFormhttps://www.bangladeshstockmarket.com/proc_n.shtml#accshttps://www.bangladeshstockmarket.com/proc_n.shtml#accs


18/43


Md.Yousuf Chowdhury

Chittagong

Stock

Exchange.

INTERNET TRADING REGISTERATION FORM:

USER REGISTRATION

All the fields are compulsory except those marked as optional

BROWSING DETAILS

Login Name (maximum 8 characters)

Browsing Password

(must be 8 characters)Re-enter Browsing Password

Legal Statusin case of company fill the company details below

The personal details are to be filled only if the legal status of the investor is NRB / Individual

PERSONAL DETAILS

First Name

Middle Name (optional)

Last Name (optional)

GenderFemale Male

Date of Birth / / as dd/mon/year (eg.12 Jan 1980)

Occupation

COMPANY DETAILS

18


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Md.Yousuf Chowdhury

Register

Chittagong

Stock

Exchange.

Company Name

Date of registration / / as dd/mon/year (eg. 12 Jan 1980)

COMMUNICATION DETAILS

Address1

Address2 (optional)

Country

Post Code

Telephone No(STD code - Telephone No)

Mobile Phone No (optional)

Email Id

Mobile Email Id (optional)

DEPOSITORY ACCOUNT / BROKER DETAILS

DP Id (optional)

BO Id (optional)

Broker Code / Sub-Broker Code / Broker / Sub-Broker LookUp

FINANCIAL DETAILS

Name of the Bank

Bank Branch Name

Bank Account No

TIN No

19
http://www.bangladeshstockmarket.com/BrokQuery?action=Search&flag=forwardhttp://www.bangladeshstockmarket.com/BrokQuery?action=Search&flag=forward


20/43


Md.Yousuf Chowdhury

The value of the CSE share is BDT 3.00

million. An

individual/company/corporation, if he/it

becomes the member of the Exchange

and fulfill the eligibility criteria, he/it

will have to pay Tk. 50,00,000/- (Tk.

Fifty Lacs) as value of share, Premiumand Entrance fee as :

Vale of Share : Tk. 3,00,000.00

Premium : Tk.40,00,000.00

Entrance fee : Tk. 7,00,000.00

The eligibility criteria for the membership are presented below:

A corporate body with a minimum paid up capital of BDT 2.5 million

Any partner or director thereof as the case may be is/has not

Less than twenty-one years of age;

Bankrupt;

Person of unsound mind;

Person convicted by a competent court of an offence involving moral

turpitude.

Found at any time by SEC or any stock exchange or court involved in anymisconduct in respect stock exchange transaction/market

OVER-THE COUNTER

A new phase for the listing facility in the Capital Market. OTC is designed for two segments of companies

The companies who are delisted from trading

Growth companies who are preparing for coming to the stock exchange.

CSE established Over the Counter facilities with a specific facilitate small & medium innovative and high growthenterprises, in raising resources efficiently through the capital market.

Chittagong

Stock

Exchange.

COMPL I ANCEDEPARTMENT

M E M B E R S H I P

ELIGIBILITY

Membership of CSEfacilitates a person

prospects to becometrading members (stockbrokers) of the Exchangethrough compliance of the

regulatory provisions ofCSE and SEC. There are129 members in CSE all ofwhom are corporatebodies.

Individual may apply and receive membership on condition that they form a corporate body within a specified time,

usually 6 months from the date of the allotment letters issued to them.

BE A CSE MEMBER

20


21/43


Md.Yousuf Chowdhury

Tk. 10, 00,000.00 (Ten Lacs) should be paid along with the

application as earnest money.

Balance amount of Tk. 40, 00,000.00 (Forty Lacs) should be

paid within 15 days (Fifteen days) from the date of allotment of

the membership.

Failure to pay the full amount within the specified time wilresult in cancellation of allotment of the share and no notice will

be required for this cancellation and the amount of Tk.10 (Ten

lacs) paid with the application will be REFUNDED in ful

without interest within 4 (Four) weeks from the end of 30(Thirty) days of allotment.

All payment should be made by Demand Draft/Pay Order

payable only to Chittagong Stock Exchange Limited.

In case the application is not accepted, the deposit of Tk. 10

00,000.00 (Ten Lacs) will be REFUNDED without any interes

by the Exchange within four weeks from the day of such

decision of refusal.

The CSE membership is transferable

subject to the approval of the Board.

However a fees of Tk. 2, 50,000.00/- isto be paid to the Exchange.

Admission to membership of the

Exchange is currently open and

available.

Broker and Dealers shall be eligible to trade in CSE when it:

Becomes a members of the CSE;

Becomes members of the CSE Clearing House;

Open a Clearing Account with a Depository Participant of

CDBL;

Obtains a Brokerage/ Dealership license from the Securities

and Exchange Commission;

Is not otherwise barred by CSE or SECThe CSE brokers/dealers are required to comply with various

requirements for continuing membership. These include:

Submission of:

Audited Annual Accounts within four months of the end of the

financial year;

Monthly Net Capital balance Report;

Shareholding pattern by-yearly;

Any changes in respect of management, structural or legal status

of Stock dealers/ stock brokers should be informed to the

Commission within 15 (fifteen) days through stock exchange;

Compliance Authority report relating to the compliance of rules

and regulations of the Exchange and SEC by his/her Member

Company. The report will have to submit to the Exchange within

15 days after the end of every six-month period ending on 30th

June and 31st December of the year.

Maintenance of the net worth at least half of its paid up

capital at all times.

Renewal of their license annually with SEC.

COMPLIANCE WITH RESPECT TO BROKER/DEALERS

KERS/DEALERS

Procedure of payment for CSE Membership:

AUTHORISED REPRESENTATIVE

CSE broker/dealer may appoint

Authorized Representative who are

registered with CSE and SEC to act as

an agent for doing all the activities

related to buy and sell of securities

through the stock exchange. The

Authorized Representatives shall

Not be less than twenty-one

years of age;

Have educationqualification of HSC or

equivalent;

Not be adjudicated as an

insolvent

Not be a person of unsound

mind;

Not be convicted by a

competent court of an offence

involving moral turpitude;

Not received punished from the

Commission or Stock Exchange.

Chittagong

Stock

Exchange.

BROKER/DEALER

A broker, dealer or their authorized representatives complies with Code of conduct prescribed by SEC.

21

The trading platform of a stock exchange is

accessible only to broker, dealer and their

authorized representative. At present

Dealers can perform transaction on their

own account only while brokers act as agent

of their client.


22/43


Md.Yousuf Chowdhury

Prohibition from any performance of work

in a member company within the period of

time rescribed b the Board

Chittagong

Stock

Exchange.

COMPL I ANCE AUTHOR I TY

Every Broker/dealer shall appoint one of its director or Chief Executive Officer as compliance

Authority for a period not exceeding three years at a time subject to the following:

He/she is not convicted of any criminal offence involving moral turpitude by a

competent court;

He/She has not been found by the Stock exchange or court involved in misconduct in

respect of transaction in any security

He/ She have obtained at least graduation degree.

D I S C I P L I NARYACT ION AGA IN S T MEMBER

22

CSE may exercise any of its

following disciplinary powers

against a member if themember or its director,

authorized representative or

employee commits any act or

omission as mentioned in theRegulation 79 of the General

Rules and Regulations of

CSE.
http://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htm


23/43


Md.Yousuf Chowdhury

Arrange training

Ad hoc legal problems

Liaison with Securities and Exchange Commission

Maintain master organ gram

Maintain personnel files and staff list

Monitor and record leave requests and leave taken

Monitor rules and regulations

Monitor, receive and disseminate regular companyinformation

Respond to requests for information, members queries and

CSE while list a company considers

ensuring that the companies meet thelisting criteria of the Exchange and also

considers the sufficiency of public

interest in the company.

The main eligibility criteria for initial listing contained in CSE

Listing Regulations is as follows:

The Company shall be a Public Limited Company under

the Companies Act,1994

Minimum Paid up capital of the applicant companyshall be BDT Ten Million (USD 0.20 million)

Share subscription must be by at least 250 applicants

In case your company fulfils the criteria, please fill in the listing

application form and send the documents as mentioned in the

regulation III (6) of the LISTING REGULATION for further

Chittagong

Stock

Exchange.

The expelled member shall forfeit to the Exchange its right of membership and all rights and privileges as a member of

the Exchange

L I S T I NG

This department is responsible for:

HOW TO L I S T

23


24/43


Md.Yousuf Chowdhury

A

N

N

U

AL

L

I

S

T

I

N

G

F

E

E

L I S T I N G F E E S

I

N

I

T

IA

L

L

I

S

T

I

N

G

F

EE

Chittagong

Stock

Exchange.

LISTING FEES

INITIAL LISTING FEE:

Up to Tk. 10 crore of Paid-up capital @ 0.25%

Above Tk. 10 crore of paid-up capital @ 0.15

However, the total listing fee shall be minimum of Tk. 10,000 (ten thousand) and

maximum of Tk. 20 lac.

A N N U A L L I S T I N G F E E

Slab/Paid-up Capital (Tk. In Million) Rates of Annual Listing Fees in Taka.

Up to 10 10,000

Above 10 & Up to 20 15,000

Above 20 & Up to 30 20,000

Above 30 & Up to 40 25,000

Above 40 & Up to 50 30,000

Above 50 & Up to 75 35,000

Above 75 & Up to 100 40,000

Above 100 & Up to 125 45,000

Above 125 & Up to 150 50,000

Above 150 & Up to 200 55,000

Above 200 & Up to 250 60,000

Above 250 & Up to 300 65,000

Above 300 & Up to 400 70,000

Above 400 & Up to 500 75,000

Above 500 & Up to 600 80,000

Above 600 & Up to 700 85,000

Above 700 & Up to 800 90,000

Above 800 & Up to 1000 95,000

Above Above 1000 100,000

24


25/43


Md.Yousuf Chowdhury

DISCLOSURE PROCEDURE

The investors have equal and prompt access tocompanys price-sensitive information. Listed

companies are required to file full, accurate and

timely information disclosures to the investors.

This will guarantee fair and orderly trading at

the Exchange. CSE monitor whether the listed

company notify timely and orderly the news ofany notice of the Meeting and entitlement, or

any decision related to the shareholders

immediately.

Essential information, which may affect the

stock prices, investment decisions, or investor

interests, must be disclosed within a specific

period, according to the table below:

DIRECT LISTING

Direct Listing is a doorway to list with the

Exchange for the company who

Does not require to increase its

existing paid up capital but want to list its

securities for prestige, liquidity benefit or

any other reasons and

Intent to off load the existing shares

of the shareholders for privatization

purpose.

1. Eligibility criteria for direct listing: The public limitedcompany having minimum paid Up capital of taka 100(one hundred)

million may apply for direct listing to CSE if it is/has

No accumulated loss

Regular in holding the AGM

in commercial operation for at least immediate last fiveyears and

Has profit in three years out of the immediate last fivecompleted accounting/financial years with steady growth

pattern.

2. Application for Listing:The application fee for Listing is Tk.10,000/-(ten thousand). The Exchange examines among others the

following documents while giving approval to the listing:

Audited financial statements for the last five years.

A Credit rating report issued by the credit rating company

registered with the Commission with minimum investment grade

of BBB".

Due diligence certificate from the directors

No objection certificate from the lending bank(s) /financial

institutions of the company

Status of loan including information concerning loan default

Information Document

3. Information about the company to the General Public:The Company shall prepare an Information Document for the

purpose of communicating to the general public the informationrequired to an investor for their investment decision. Information

Document shall be published in at least two widely circulatednational dailies minimum 7 (seven) days before commercial trade

upon listing by the Exchange.

4. Disposal of Shares:The existing shareholders of the concernedcompany shall sell the shares through the Exchange upon listing. At

least 10% of their shareholdings in the company must be offered for

sell to the public within 30(thirty) working days from the date oflisting. However they are not permitted to sell more than 50% of his

existing shareholdings until the company holds the annual general

meeting after completion of one full accounting year of the company

upon listing with the Exchange.

5. Tradin and Settlement rocedure:Dematerialization of the

The Exchange disseminates the information through their respective trading terminals immediately after receiving thereof

from the listed company. Some information also requires to be disseminated through the newspapers by the issuers for its

shareholders after sending the news to the Exchange or the SEC.

Chittagong

Stock

Exchange.

The Board of CSE has the right to ease any condition in case of a deserving case.

LISTED COMPANY INFORMATION

COMPANY PROFILE COMPANY ADDRESS COMPANY DISCLOSURE (YEAR WISE)

25

A price sensitive information to

the Exchange

Within 30 minutes of the

completion of the Board

Meeting

A report of every sponsor or

director of a listed

Before 30 working days of

company disclosing his intentionto buy or

his expressing such

Sell or otherwise dispose of

securities in the company.

intention

The audited financial statement

requires to be submitted

Within 134 days from the

date on which the financial

years ends

Half Yearly Financial Statement

shall be transmitted

Within one month of close

of the first half-year


26/43


Md.Yousuf Chowdhury

DE LISTING

Grounds for explicit de-listing/cancellation oflisting criteria are as follows:

Fails to comply with the requirements of

any of CSE listing regulations;

Where the Exchange considers it

necessary for the protection of investors;

Fails to pay penalty or any other dues

payable to the exchange for a period of

two years;

Fails to declare dividend or bonus:

i) for five years from the date of

declaration of last dividend or bonus; or

ii) in the case of manufacturingcompanies, for five years from the date of

commencement on commercial

production; or

iii) for five years from the date of

commencement of business in all other

cases

Fails to hold its AGM for a continuousperiod of three years;

Gone into liquidation either voluntarily or

under court order;

Fails to pay the annual list fees for a

period of 2 years;

If securities are quoted below 50 per cent

of face value for a continuous period of

three calendar years.

No com an will be de-listed from CSE unless

In a brief it performs the following

functions:

a) Spot verification

b) Check whether members are

following the company act or not

c) check whether members are

maintaining the books properly

d) maintain checklist

Chittagong

Stock

Exchange.

INSPECT ION

During the period, eleven brokerage

houses were inspected by SEC based on

some specific observations of

26


27/43


Md.Yousuf Chowdhury

Chittagong

Stock

Exchange.

surveillance people responsible for

monitoring daily securities trading. In

this period the Commission requested CSE

to investigate into the books and

records of three brokerage houses of CSE

in respect of transactions of Bank Asia

shares and asked DSE to inspect books

and records of three brokerage houses of

DSE regarding trading of Bata Shoe

Company shares, Beach Hatchery Ltd

shares and Rahman Chemical shares. In

the referred period the Commission

decided that the SECs Surveillance Team

should conduct regular inspection of

books and records of at least one stock

broker/dealer of the stock exchanges in

each month. Accordingly, the SEC

Surveillance team carried out inspection

in compliance with the aforesaid

decision.

The SECs Surveillance team also detected unusual/abnormal trading of Tripti Industries Ltd, at DSE. Based on therecommendation of the Surveillance Team the Commission suspended trading of securities of Tripti Industries Ltd. and

constituted an enquiry committee in this respect. During this period the SEC requested DSE to investigate into thesecurities transactions of Lafarge Surma Cement Ltd. and NCCBL and requested CSE to investigate into securities

transactions of Lafarge Surma Cement Ltd. and BCIL. In the referred period, as a part of regular inspection, SECs

Surveillance Team visited two brokerage houses of DSE and two brokerage houses of CSE to examine books andrecords for ensuring proper compliance with the securities laws. Besides, the Commission constituted five enquiry

committees to enquire into the transactions of Mercantile Bank Ltd., Mutual Trust Bank Ltd., One Bank Ltd, Uttara

Bank Ltd. and Bank Asia Ltd.

SURVE I L LANCE

The Surveillance Department of the Commission monitors on real time basis the trading of securities on

Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. through non-trading version of work

27


28/43


Md.Yousuf Chowdhury

MARKET SURVEILLANCE & COMPLIANCE MONITORING

CSE maintain an effective market surveillance to

detect and prevent unethical, unusual and illegal

practices in the market. The Exchange Complianceand Surveillance Department is primarily responsible

for day to day market surveillance, supervision and

compliance monitoring of trading activities, including

review of pricing of orders.

When any unusual market action occurs it is reported to the

Manager, Compliance and Surveillance. In many cases by

checking with Surveillance, the Manager will try to trace the

reason for the action to a specific cause such as recently

disclosed information, or rumors. Market surveillance may

also check broker firms as to the source and reason for

activity stemming from their particular firms. If no

explanation of the unusual activity is revealed the Exchange

may make a query to the Company to determine whether

they know the cause of the action. It the action appears to be

attributable to a rumor or report or to material information

that has not been publicly disseminated, the Company is

requested to take appropriate corrective action and may be

advised to halt trading until such action has been taken.

ENFORCEMENT

CSE put in place a thorough risk management

system which is regularly monitored to pre-

empt market failures. CSE Surveillance and

Compliance Department monitors the issuers

compliance activities and brokers regular

and/or trading activities on regular basis. It

watch performance of members, their net

worth, undertakes on-line monitoring of

members turnover position and exposure,margins arrangements with exchange and

clients etc.

The Department conducts investigation of any act

of member firms or listed companies, as the case

which may be deemed to violate the rules and

regulations of CSE and/or SEC and gather all

evidence concerning the said acts to pass it to the

relevant committee.

While taking action for violation of any rules and

regulation CSE send a show cause notice to the

company with an order to comply the relevant

clause. And if not complies within stipulated time

then take appropriate action which may be to

impose fine, to warn, to suspend or to de-

list/terminate the listed/member company.

Manage trading and operate VistaSettlement System

Maintain master file

Print daily reports and producestatistics

Support internal users and setup andtrain new system users

Chittagong

Stock

Exchange.

stations. Through this system the SEC Surveillance Officers watch the daily trading pattern and time to time

inform the top management of the Commission about the market condition. At the end of the trading period,

a report containing abnormal activities, if found during the trading period, is prepared and submitted to the

Chairman, Members and other senior officials.

MARKET SURVEILLANCE & ENFORCEMENT

SYSTEMS

The Systems Department carries out the following functions:

28


29/43


Md.Yousuf Chowdhury

HardwareHardwareSoftwarSoftwar

ee

Wide area networkWide area network

(WAN(WAN)

Prepare and pay invoices

Prepare primary accounts Receive and bank cheques

Reconcile bank accounts and regular

cheques

Chittagong

Stock

Exchange.

Deal with user queries

Manage communication network

Manage information technology developments and suppliers

Manage internal information technology awareness

Support required by the department

F I NANCE & ADM IN I S TRAT ION

This department is responsible for the following: Act as company secretary Manage CSE finances

Manage income tax deductions and payments Manage petty cash

S W O T A N A L Y S I S

O F C H I T T A G O N G S T O C K E X C H A N G E

S t r e n g t h s :

29

Access server

Central server/ stratus C 4000

series

PA-Risc processor

Fault tolerant continuously

available

16 GB hard disk

512 Ram

512 cache memory

Speed 96 MHz

Modem

Olte

U.P.S

Data storage DAT

Application software

CSE version of the VECTOR

(versatile engine for centralized

trading and on line reporting)

It has 3 models

BWS (Broker work

station)

Market operation

Surveillance

System software

Operating system-Unix

RDBMS (relation data base

management system): Sybase

Regional network

Chittagong and Dhaka

members can connect their

own office through WAN

Sylhet members can connecthrough LAN

Country wide WAN

Network covers

Chittagong, Dhaka and

Sylhet.

Chittagong: Dhaka is

connected through VSAT and

T & T leased line as back up.

Ei line, High speed opticalfiber is used in the network


30/43


Md.Yousuf Chowdhury

1 .Trading from the three cities; out reach tovast investors:Chittagong stock exchange has asound trading system with network containing itthree major cities: Dhaka, Chittagong & Sylhet. Inthis way it operates from 3 major cities in

Bangladesh which really classified in expanding thestock market and eventually it helps the not onlythe existing investors to invest further but also helpthe new investor to come to invest their money.Sooth to say, it provides a strong communicationbounding through out the different cities.2. Ready for future by opening avenues forcross border trade: The trading & settlementsystem of Chittagong stock exchange limited isready to meet and future growth of the market.CSE expecting crosses border indexing under SAFF,(South Asian Federation of Exchanges). The market

is wide open now days. The world is highlyglobalized and market is getting much moresophisticated. In this way. CSE has taken initiativein following these rules as well. Its takenauspicious step for the investor by trying to openthe door cross border communication especiallySAFF. This step it a further in enrichment of itsdevelopment.

3. Very competitive low listing fees: Listingfees at CSE ltd. are very competitive & reasonable.

The listing fee for the up coming company is verymuch reasonable and thats really boosts up the

company to be listed. The fees category waspresented in the very early of this report.

4. Market analysis & investors relations:Chittagong Stock Exchange limited has a researchcell for continues market status apperception &understanding investors general behavior. The R/dis continuously forecasting the market, analyzingits changes, the reason behind it. It has a well baseguidelines for the brokerage firm any violation itwill be strongly prohibited as well as serious actionis taken. Being a part of it, continuous interaction is

5. The best way to raise fund for yourcompany: In the era of free economy &democracy, stock market provides aneffective linkage between large pool ofinvestors & entrepreneurs. Investors on

their free will can take risk & investdirectly with the project share ofownership & profit. Any company ororganization that wants to maximize itsfund can generate it through sharemarket. In sooth, here the company isinvolving the general people to be part thecompany. In this way, it maximizes itsfund for further development.

6. Reduce reliance on debt finance:Borrowing and their prescheduledcompulsory debt servicing could be

avoided if you are publicly listed company.

7. Tax benefits: If you are a listedcompany you pay less tax. At the currentrate, listed companies pay at least 5% lesscorporate tax than those who are notlisted.

8. Liquidity: Your shares will liquid.Entrepreneurs may love to develop oneproject successfully. Run it in atransparent way & they change into cashit when it need for the sake of developing

another one. Stock market can facilitateyour ambitious development path as anentrepreneur. Share can be converted anytime into cash. If you know have thesound notification about the market youwill be the master of it. Risk will be justhistory. People have common notion ofthis market in the very early of this marketthat there is too much risk and one cannot get maximum return but bit by bit this

W e a k n e s s e s :

1. Stock markets operate on a particular timein the daytime. This time span is notsufficient for the non-institutional investors.The time that it operates is very limited thatthe daily transaction in doing so can not befulfilled which puts the investor intremendous crisis.

2. High bank interest rate possesses highthreat for stock market. High interest ratealways discourages the investors.

3. Lack of institutional investors. Still there islacking for the institutional investor. The CSEoperations, the CSE criteria, rules andregulations are responsible for this. If thefavorable environmental attitude is availablemore and more institutional investor willcome.

4. Regulatory body like SEC needsmodernization. The controller of CSE,security exchange commission (SEC) needmore technological advancement. Tomaintain a constant monitoring it mustfertilize its resource like technological,personnel, departmental etc.

5. Lots of listed company does not perform

their duty regularly like they do not performAGM, GM regularly, do not provide dividendregularly, do not inform to be investors etc.The different organization is categorized intoA, B, N, and Z category. Those who performAGM regularly and declared dividend morethan 10% they are A category and whoperform AGM regularly and declared dividendless than 10% they are B category, who arenew they N category and those who do notperform AGM regularly and declared nodividend are Z category.

O p p o r t u n i t i e s :

I. Investors are now more conscious aboutinvesting their money into the shares of thecompanies. New awareness arising to the peoplesmind, new publicity is made for the attraction ofthis field. The system is much mobilized and trycapture more and more investors,

II. After 1996s incidence, now Securities &Exchange Commission (SEC). The SEC is now wellstructured and well-based, wellestablished.

III. The number of Internet users is increasing.Internet is a key part of trading. Day by day theusing of internet is accelerating, that allow theinvestors to an easy access of trading in terms ofshares. Now they can order the representativebroker to sell the shares or buy. So, internettrading system (ITS) is a wonderful innovation forCSE.

IV. The governments policy is changing. Thechanging environment in share market providesthe precise help to the investors.

V. Commercial Bank reluctance to provide long

term long.VI. SAFE (South Asia Federation of Exchange). OTC

market is a potential outcome for CSE. Now inthese very days, its prosecuting the south Asiancountries. The neighboring countries will be alsobenefited by this. Huge round of transaction maytake place in this way.

VII. Lots of quality fresh business graduate arecoming up from both private and public educationsector in Bangladesh. These fresh graduates maycreate an opportunities to stimulateprofessionalism in stock market.

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T h r e a t s :a. Regulatory bodys (SEC) regulation. The regulation of SEC still not up to mark that

may discourage in investing.b. BTTBs monopolistic attitude. The logistic approach is still prevailing. The attitude

should obtain an administrative driven.c. Bargaining power of listed companies. The continuous bargaining is still prevailing

which may impact in CSE.d. The lion share of DSE.e. Frequent political instability. The Micro environmental factor like political

instability always takes place in the country which seriously injured the investor. Andit case tremendous change in price flections of shares.

f. Lower growth rate & lower savings rate & per capita GDP.g. The pace of industrialization is slow. The contribution of industrialization sector in

GDP is bellow expectation.h. Most of the company do not provide satisfactory rate of dividend.

Key issue analysis:

1.Should CSE pour more money into R&D develop more sophisticated service quality.

2. Should CSE go for costly promotional campaign for expanding its current market to

attract new investors, Companies and Members.

3. Should CSE establish full-fledged marketing department to ensure proper marketing

and advertising activities.

Chittagong

Stock

Exchange.

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11 times more moneyinvesting in Japan in 1987than in the United States.

4 times more moneyinvesting in Hong Kong in1992 than in the US market.

4 times more moneyinvesting in Finland in 1998than in the United States.

More than 10 times asmuch investing in UK in 1990

than in US.

The stock market is acting like abull market for last few months. Itsounds like most stocks are goingto be uprising and volatile. No oneknows how long the momentumwill stay in the market.

Chittagong

Stock

Exchange.

Opportunities for Foreign investors In Bangladesh:

Bangladesh has adopted a very liberal industrial policy to attract foreign investment

No limitations pertaining to equity participation i.e. up to 100 percent foreign private

investment allowed.

Except five reserve sectors, all industries are open for private investment. Industries

earmarked for public sector investment are in the reserve sector namely:

(i) arms, ammunition and other Defense equipment and machinery

(ii) Production of nuclear energy,

(iii) Forest plantation and mechanized extraction within the bounds of reserved forests,

(iv) Security printing (currency notes ) & minting and,

(v) Railways & air transportation (except certain domestic routes and air cargo)

- No permission of the government

required to set up new industries.

-For obtaining industries facilities like

procurement of land, electricity, gas and sewerage connection, importation of capitalmachinery and raw materials tax rebate, duty drawback facilities etc. industries need only

to be registered with the board of investment (BOI) in a simple prescribed from.

Investing in stock market is help out a company in business which leads to remove poverty

Market earns about 500 to 800 points within 4 to 5 monthsin CSE and DSE which is a remarkable growth. DSE-20 was

1200 points in March and now it has jumped to 1777 and

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Investment companies that

continually offers newshares and buys existing

shares back at the request

of the shareholder and usesits capital to invest in

diversified securities of

other companies.

A security that gives small

investors access to a well-

diversified portfolio of equities,

bonds and other securities. Each

shareholder participates in thegain or loss of the fund. Shares

are issued and can be redeemed

as needed.

It is a recognized principle that diversification of

investment reduces risk. An individual may not have the time,

expertise and resources to undertake such diversification.

Here arises the advantage of a Mutual Fund. Mutual Funds pool

the savings of a great number of investors and make

investments in a wide array of securities. In Bangladesh ICB

has pioneered Mutual Funds for the sake of investors and of

the capital market. Mutual Funds are known as open end Mutual

Funds. The issued capital of a Mutual Fund is limited, that

is, a Mutual Fund offers a limited number of certificates for

sale to the public. The amount of capital and the number of

certificates of each Mutual Fund remains unchanged. ICB

Mutual Funds are independent of one another. A Mutual Fund

being listed is traded on the Stock Exchanges. Price of

Mutual Fund certificates after IPO is determined on the Stock

Exchanges through interaction of supply and demand. The

market price of a Mutual Fund certificates is available in

Stock exchange quotations and in newspapers.

Chittagong

Stock

Exchange.

CSE-30 has surged to 2517 points from 1577 since March of

this year. The Market looks stronger and has attracted more

investors recently, and investors remain fairly bullish and

have earned confidence in the stock market. The question

is, anyone or investors have real information about profits,sales growth, earning! Unfortunately it is not. It is difficult to

speculate a company's share price without real data on

whose business is growing in sales, who is grabbing the

market share and leading the market. That information is

not available yet to the public. It is true Bangladesh is one of

under developing countries with 112 millions of people. A lot

of development is essential to the country and it will happen

sooner or later. However, emerging stock market and

economy hardly get world attention. The market stays un-

attention to the investors because of revolt and government

corruption and natural disasters. When country's economy

gets started, they do it with a bang. According to study, the

Indian emerging markets will continue to grow at about

double the rate of the developed world. Every year there is

an emerging country, like Japan in the 1960s that grows at

least twice as fast as the United States. That means

business is booming....people have jobs and investors get

richer and richer. Let's take a look some of emerging

countries.

The moneymaking opportunities are endless when you invest in growing countries like China, Finland, India or probably

someday in Bangladesh but you have to invest wisely. Some of banking stocks went up sky-rocket and remained veryvolatile; they jump 20 to 80 taka a day. The primary needs for the country is energy, housing, food, banking, insurance

and pharmacy. It shows the banking sector is doing better than others. Every investor made out of Banking IPOs at least

200/300 taka. The most conservative way to invest in CSE or DSE with a good return in the companies who provide

dividend at least 10%. You know that you will get guaranteed return within a few months.

:: Mutual Fund ::

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Amutual fund is types of investment vehicle where investors

pool their money In order to allow each investor participate

in a portfolio of securities. The individual investor doesn't

actually own each security but instead, he owns shares of the

mutual fund. The main benefit of a mutual fund is that it

provides a way for the investor to achieve diversification in

his investments without having to invest a lot of Money. The

first mutual fund was the Massachusetts Investors Trustintroduced in 1924. At the end of its first year, the fund

had 200 investors with $63,600 in assets. At the end of 1995,

the fund grew to 73,500 investors with assets totaling $1.8

billion! Now there are over 7000 different mutual funds

available for you to choose from. You may be wondering why

you should choose a mutual fund. Simple - a mutual fund

offers 2 large benefits over owning the stocks individually.

Those benefits are diversification with professional

management without having to invest a lot of money.

Diversification is

important because it helps

to reduce the risk. By

owning shares of multiple

companies, the funds

share values are not

devastated if an

individual company has a

poor performance.Selecting which securities

to buy, the allocation of

cash and securities, and

when to purchase is all

done by the fund manager

or the management team.

The fund manager has the

training, time and the

resources to make the best

informed investment

decisions

Chittagong

Stock

Exchange.

WHAT IS A MUTUAL FUND?

B A C K G R O U N D

Mutual funds have become very important part of investing over the last decade.

Mutual fund shareholder accounts grew from 46 million to more than 131million

accounts with 38 million individual investors owning funds. In 1983 the mutual

fund industry had about $290 billion assets. By 1994 the asset base had

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Stock

Exchange.

increased to $2.1 trillion and by June of 1997 reached $4 million. The growth in

asset value is a result in the three year bull market experienced from 1995

through 1997 and the increased popularity of mutual funds by those baby boomers

saving for retirement. The tremendous growth of mutual funds makes this industry

the second largest financial intermediary after commercial banks.

The concept of a mutual fund is best

understood by an example.

Types of mutual fund: Mutual fund can be classified in totwo basic categories:

Open-end funds: An open-end investment

fund stands ready at all times to sell or redeem

shares from stockholders. There is no limit.

Closed-end fund: A closed end investment

fund has a fixed number of shares and purchaser

& sellers of shares must deal directly with each

other rather than with the fund. Closed end

funds trade on an exchange or over the counter.

Furthermore the fund does not stand ready to

buy the shares from the investors.

35

EXAMPLE: Suppose you and your friends

are too busy to develop the expertise

needed to mange your own assets. One of

your neighbors however, has had years of

hands-on experience as a trustee of his

companys pension fund. You and your

friend decide to pool your money and

have this experienced investor act as

your investment advisor. He will be

compensated by receiving a smallpercentage of the average amount of

assets under his management during the

forth-coming year.

Mutual funds are non banking or non

depository financial intermediaries that

gather funds from saving and investing

public and utilize the accumulated pool

of funds by investing in stocks, bonds,

currencies, futures, and options

contracts or a variety of other

financial instruments (A key element in

any M/F is its ability to provide the

investors with professional mgt. of

their funds along with otherprofessional services such as record

keeping, custodial services and prompt

dissemination of information)


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Chittagong

Stock

Exchange.

T Y P E S O F M U T U A L F U N D S A V A I L A B L E

Domestic Equity Funds - These mutual funds

mainly focus on stocks offered by different U.S.

companies. With this type of fund there is a widerange of offerings that takes into consideration the

size of the company, the stability of the company,

growth and the potential value of the company.

Global/International Funds - Global or International mutual funds mainly allow the investor

to include foreign equities into their investments.

Although deemed slightly riskier their values dotend to go up when domestic equities drop, offering a

balance to the investors portfolio.

Sector Funds - sector funds give the investor a way to focus on specific parts of the business world.

For example, niches like real estate, precious metals or financials. If an investor is able to tolerate

an amount of risk, they may end up benefiting from investing in this way. Particularly if the investorknows something about that market segment.

Fixed Income Funds - fixed income mutual funds tend to be less volatile. This is the right fund for

an investor who is looking for income? Fixed mutual funds for the most part are made up of bonds,CD's and money market funds. Yes, they do fluctuate with interest rates, still are a sound investment

for someone looking for an income generating portfolio.

Hybrid Funds - Hybrid mutual funds are generally made up of different investment sectors in one

mutual fund. For example, a usual mix may be the pairing of equities with Bonds or blue chip

stocks with riskier ones.

Index Funds - Index mutual funds imitate the selections and amounts of specified market indexes

like the S&P 500. They are generally unmanaged keeping costs down.

Enhanced Index Funds - Enhanced index funds are actively managed funds applying a portion of

their resources to outperform their benchmark indices.

Asset Allocation Funds - Asset allocation funds target investors who want a single product solution.

They are designed to invest across the primary asset classes including equities, fixed income

securities and money market. Each fund is allocated among different asset classes according to theirrisk tolerances.

Conservative Allocation Funds - Conservative allocation mutual funds are usually for investors

with a minimum five-year investment timeframe.

36

Domestic equity funds

Global funds

Sector funds

Fixed Income Funds Index Funds

Hybrid Funds

Asset Allocation Funds

Enhanced Index Funds

Conservative Allocation Funds


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MMutual funds provide investors with a way to diversify their

investment under professional management, which most

investors may not be able to obtain on their own. Since the

funds operate with a large pool of money, the investors benefit

from economies of scale, such as a lower trading cost and a

higher yield. Besides delivering attractive yields, many funds

provide their investors with such services as check-writing

privileges, custody (as a service), and bookkeeping. Investors

also benefit from the knowledgeable investment choices of

securities and investment objectives that funds

stock markets in bangladesh

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