(1) INTRODUCTION
This report titled “The Activities of Dhaka
Stock Exchange” is prepared to fulfill the requirement of the internship
program of the B.B.A degree. It is mandatory requirement of the program that
require a student to work in a particular organization for minimum three
months. This report, which contains the outcome of a project assigned by the
Dhaka Stock Exchange Ltd., is presented to the concerned teacher as well as the
organization
(1.1) BACKGROUND OF THE STUDY
At the current situation of business and association is playing an
essential role to develop the financial situation of a country. So in the
sector of trade and connotation it is badly fundamental to continue some
management. In the association it is used to continue all sorts of works
resembling, monetary, maintain inventory effective arrangement, numerical uses
and record management system etc. All of which create working simple, speedy
and exact so as stock business “Dhaka
Stock Exchange” also exercises structural manage system
to boost their trade and widen their situation. I Worked for 3 months as intern
to “Dhaka Stock Exchange” and organized its report. The
visitation was took place in the head office of Dhaka Stock Exchange in Motijheel
and I am very glad for getting the opportunity to accomplish my practical
investigate on Dhaka Stock Exchange. The report will
definitely increase the knowledge of other students to know about the largest
stock exchange of Bangladesh.
(1.2) COMPANY PROFILE
INSTITUTION NAME
The Institution
name is “DHAKA STOCK EXCHANGE LTD. (DSE)”
LOCATION
DSE Head Office: Dhaka Stock Exchange Ltd, Stock Exchange Building, 9/F
Motijheel C/A, Dhaka-1000 Phone: +88-02-9564601, 7175703-11 Fax:
+88-02-9564727, +88-02-9569755
DSE Chittagong Office: Shafi Bhaban, 6, Sheikh Mujib Road, Agrabad
Commercial Area, Chittagong-4100 Phone: +88-031-2514100 Fax: +88-031-2514100
DSE Sylhet Office: RN Tower Chowhatta Sylhet Phone: +88-0821-727880 Fax:
+88-0821-727880
DSE Khulna Office: City Trade Center (2nd Floor) 75, K.D.A Avenue, Khulna
- 9100 Phone: +88-041-811600
Fax:+88-041-811600
DSE Rajshahi Office: Rajshahi Chamber of Commerce & Industry Chamber
Bhaban (1st Floor) Station Road Rajshahi -6100
FORMATION
Dhaka Stock Exchange (DSE) is a public limited company. It is formed and
managed under Company Act 1994, Security
and Exchange Commission Act 1993, Security
and Exchange Commission Regulation 1994, and Security
Exchange (Inside Trading) regulation 1994. The issued
capital of this company is Tk. 500,000 which is divided up to 250 shares each pricing
Tk. 2000. No individual or firm can buy more than one share. According to stock
market rule only members can participate in the floor and can buy shares for
himself or his clients. At present it has 238 members. Market capitalization of
the Dhaka Stock Exchange reached nearly $9 billion in September 2007 and $27.4
billion on Dec 9, 2009.
LOGO
MISSION
Ø Proactive
approach to keep pace with continuous technological advancement, and providing
highest standard of service through efficiency improvement and introduction of
new products.
Ø Contributing
to country’s economic growth through creation of wealth, facilitating access to
capital and penetrating untapped market.
Ø Superior
corporate governance to enhance confidence of investors, regulators, issuers
and intermediaries.
VISSION
To be the
leading exchange in the region and a key driver of economic growth with
state-of-art technology and world class service to ensure highest level of
confidence among stakeholders.
OBJECTIVES
Dhaka Stock
Exchange shall endeavor to achieve the following objectives within 2020:
Commercial
Ø
Achieve a sustainable average daily turnover of
BDT 25 billion.
Ø
Ensure
steady domestic and offshore institutional investments of at least three fourth
of the total investments in the market.
Ø
Attract more foreign investments to attain a
steady level of at least 30% of the total market capitalization.
Ø
Double the total number of listed securities
(other than Government Bills and Bonds)
Ø
Increase depth and liquidity of bond market,
including bringing in the Government Securities under trading net.
Ø
Increase breadth by listing new products, i.e.
Index futures, ETF, Sukkuk and derivatives.
.
(1.3)
OBJECTIVE OF THE STUDY
Objective of the study are mentioned below –
- To present an overview of Dhaka Stock Exchange Ltd.
- To appraise the activities of Dhaka Stock Exchange Ltd.
- To develop the practical knowledge by the practical orientation of work.
- To find the reality of practical life.
- To build up the pillar of the career for the near future.
(2) METHODOLOGY
To attain the objective, I
collected the different data and information required. Those data and
information were collected from various sources and then analyzed.
Collecting
data information:
PRIMARY DATA:
- Observation and collection the data my concern dept. ‘GENERAL ACCOUNTS’ Of Dhaka Stock Exchange Ltd.
- Conversation with the executives and officers of Dhaka Stock Exchange Ltd.
SECONDARY DATA:
- Price index of DSE
- Annual report of listed companies
- Monthly Review of Dhaka Stock Exchange
- Several Kinds of Academic Test-Book
- Different publication regarding Stock Exchange Function
(2.1) LIMITATION OF THE STUDY
While going through the internship program, it
should be noted that period was very pleasant because of cooperation and
trustfully access had been given into too many databases for updating. But as
it was an internship program designed by the department of B.B.A course some
limitations should to be mentioned from report preparation point of view.
- Shorting of practical experience to comprehend the conceptual framework of this type of report.
- Lack of comprehensive written reports.
(3) AN OVERVIEW OF DHAKA STOCK EXCHANGE LIMITED
(3.1) DHAKA STOCK
EXCHANGE LIMITED
(3.1.1)
History
The DSE was first incorporated as
the East Pakistan Stock Exchange Association Limited on April 28, 1954.
However, formal trading began in 1956 196 securities listed on the DSE with a
total paid up capital of about Taka 4 billion. On June 23, 1962 it was renamed
as East Pakistan Stock Exchange Limited. After 1971, the trading activities of
the Stock Exchange remained suppressed until 1976 due to the liberation war and
the economic policy pursued by the government. The trading activities resumed
in 1976 with only 9 companies listed having a paid up capital of Taka 137.52
million on the stock exchange. In May 13, 1964 it was renamed as Dacca Stock
Exchange Limited. In 1986 it was renamed as a Dhaka Stock Exchange
Limited.
(3.1.2)
Legal Control
The Dhaka
Stock Exchange is registered as Public Limited Company and its activities are
regulated by its Articles of Association and own rules, regulation and bye-laws
along with the Securities and Exchange Ordinance, 1969 and Companies Act 1994.
(3.1.3) Members:
Number of
members at present is 300. Provision has been made to increase the number up to
500. Membership is open for foreigners also.
(3.1.4) Trading:
Investors
trade their securities in DSE. Trading is done through automated on-line system
everyday except Friday and Saturday other government holidays. Continuous
session for trading is from 10:30 hours to 2:00 hours and post-closing session
is from 2:00 hrs to 2:30 hours. All such trading takes place in four types in
four types of markets, as narrated below:
(1)
Public Market. Only
trading of market lot share of ‘A’ group
is done here through automatic machine.
(2) Spot Market. Spot transaction is done here through automatic
machine ‘B’ & ‘Z’ group shares are traded here.
(3) Block Market. A place where bulk quantities of share are
traded through pick and fill basis.
(4) Odd lot Market. Odd lot scrip are traded here based on pick
and fill basis.
(3.1.5)
Policy making body:
The Council is responsible for
policy making only. It consists of 24 members by Article 74 (1) mentioned
below.
- 12 councilors are to be elected from members.
- 12 Selected councilors.
v
One councilor to be nominated by the Ministry of
Finance) Finance Division) not below the rank and status of joint Secretary.
v
One councilor to be nominated by the Bangladesh
Bank from amongst its officers of or above the rank of General Manager.
v
President of institute of Chartered Accountants
of Bangladesh, ex-officio.
v
President of Federation of Bangladesh chamber of
Commerce and Industry, ex-officio.
v
President of Metropolitan Chamber of commerce
and Industry, ex- officio.
v
President of Dhaka Chamber of Commerce and
Industry, ex-officio.
v
One councilor to be nominated by the Ministry of
Industry not below the rank and status of joint Secretary.
v
One councilor to be nominated by the Ministry of
Commerce not below the rank and status of joint Secretary.
v
President of Supreme Court Bar Association,
ex-officio.
v
Head of the department Finance/Economics, Dhaka
University, ex-officio.
(3.1.6)
Management
As per Article 105B, the management is totally separated from the Council. A professional Management Team is running day-to-day Operations and the Chief Executive Officer (CEO) is the head of Management Team of the Exchange. Other members are the Secretary, Financial Controller and It-Director. Organ gram of Management team is given below:
Listing of Companies. (As per
Listing Regulations)
·
Providing the screen based automated trading of listed
Securities.
·
Settlement of trading. (As per Settlement of Transaction
Regulations)
·
Market Administration & Control.
·
Market Surveillance.
·
Publication of monthly Review.
·
Monitoring the activities of listed companies. (As per Listing
Regulations).
(3.2) STATEMENT OF THE PROBLEM:
Before the emergence of Bangladesh
as an independent country the Dhaka Stock Exchange had hardly any significant
role in the business sector.
The present government and its
predecessor have not played any effective step in boosting the development of
Dhaka Stock Exchange.
The statement of the problem is
to improve the operating performance of Dhaka Stock Exchange.
(3.3) SIGNIFICANT OF THE STUDY:
- To learn details about the Stock Exchange Market.
- To compare the market capitalization.
- To compare the performance of the previous year and present year.
- To know the performance of Dhaka Stock Exchange.
- To know the dealings of Stock Exchange market.
- To understand the role of Stock Exchange market for the development of the economy of Bangladesh.
(4) AN APPRAISAL OF THE ACTIVITIES OF DHAKA STOCK
ECHANGE LTD.
Dhaka Stock Exchange Ltd. (DSE) is
a very reputed and important organization in the financial sector of Bangladesh.
It is being proved to be an excellent enterprise for-
- Being action oriented
- Promoting managerial autonomy and entrepreneurship
- Paying close attention to the needs of officers and employees.
- Having a simple organization structure
The head of every department is
charged with the responsibility to take the necessary actions to make it
possible for each officer and employee to contribute to his best to the
performance of the group or department, which ultimately will lead to the
fulfillment of Corporate goal- the efficient operation of the securities market
of the country.
Accordingly the proposed Organ gram
Structure as adopted/accepted in the Pay Scale Review Committee Report is
considered as the basis guidelines, subject to partial modification, which was
accepted in the first meeting of the organ gram Implementation Committee.
- Completion of regulatory formalities regarding the transfer of existing membership (share).
- Yearly renewal of registration of all membership from SEC.
- Competition of all formalities regarding the registration of new members by SEC.
- Collection and preservation of yearly audited Balance Sheets of member houses and submission of one copy to SEC.
- Completion of all formalities regarding the registration of new/fresh authorizes and sending to SEC for registration.
- Renewal of registration of existing authorized representatives from SEC
- Registration of authorized switched off from one member house to another.
- Maintenance of updated information regarding all the members through Database
- Maintenance of all member files and all letters, documents, etc. related to members.
- Communication with members for members for training provided by DSE
(4.1) ADMINISTRATION DIVISION
The Administration Department of
DSE runs with the goal of providing possible assistance to all other
departments in their smooth operation. The number of member firms in DSE has
been increased from 195 to 230 in recent days. The DSE has also launched upgraded
trading system recently.
The Human Resources Department is
concerned with the selection, recruitment, training of employees, maintenance
of employee database, employee leave maintenance, etc. As the number of
officers and employees in DSE is increasing day by day, the workload of HRD has
also expanded. Now a day the department is arranging different training
programs for members and authorized representatives.
The Administration Division is
involved in all day affairs administrative activities and all works of the
CEO’s Secretariat. This department also arranges training programs offered by
DSE and SEC.
The Executive in each part will
report to respective Senior Executive and each Senior Executive will report to
Manager. Manager will be responsible to AGM, AGM; will be responsible to DGM,
Admin and DGM; Admin will finally be responsible to CEO through GM, Admin.
- Completion of regulatory formalities regarding the transfer of existing membership (share).
- Yearly renewal of registration of all membership from SEC.
- Competition of all formalities regarding the registration of new members by SEC.
- Collection and preservation of yearly audited Balance Sheets of member houses and submission of one copy to SEC.
- Completion of all formalities regarding the registration of new/fresh authorizes and sending to SEC for registration.
- Renewal of registration of existing authorized representatives from SEC
- Registration of authorized switched off from one member house to another.
- Maintenance of updated information regarding all the members through Database
- Maintenance of all member files and all letters, documents, etc. related to members.
- Communication with members for members for training provided by DSE
FUNCTION OF ADMINISTRATION DEPARTMENT
There is lot of department
including with Administration department and as well as lots of activities. To
achieving organizational goal this department play a vital role. The function
of Administration department are broadly
describe in under below:
GENERAL FUNCTION
·
All
day affairs administrative activities.
·
All
works of the CEO’s Secretariat.
MEMBERSHIP AFFAIRS
- Completion of regulatory formalities regarding the transfer of existing membership (share).
- Yearly renewal of registration of all membership from SEC.
- Competition of all formalities regarding the registration of new members by SEC.
- Collection and preservation of yearly audited Balance Sheets of member houses and submission of one copy to SEC.
- Completion of all formalities regarding the registration of new/fresh authorizes and sending to SEC for registration.
- Renewal of registration of existing authorized representatives from SEC
- Registration of authorized switched off from one member house to another.
- Maintenance of updated information regarding all the members through Database
- Maintenance of all member files and all letters, documents, etc. related to members.
- Communication with members for members for training provided by DSE
BOARD AFFAIRS
- Contact with the CEO and Board of Directors and set up the schedule of Board meeting
- Preparation of minutes of the Board meetings and Committee meetings and get those minutes signed by the CEO and Board of Directors
- Communication with Securities and Exchange Commission regarding the decisions of the Board as per requirement of the Board and SEC.
DOCUMENTATION,
CORRESPONDANCE & FILING
- Preparation and maintenance of all documents relating to Board meeting and Committee meeting.
- Forwarding of letters, documents, etc. to SEC, Member firms and other institutions.
- Receiving and filling of all documents, letters, etc. from SEC, member firms and other institutions.
- Issuance of departmental circular, IT announcement, etc.
ADDITIONAL AFFAIRS
- Coordination of all activities relating to the maintenance of Investor’s protection fund
- Any other action as required by CEO.
(4.2) HUMAN RESOURCES DEPARTMENT
- Filling and keeping filed positions in the organization structure.
- Identification of job requirements and selection, recruitment, placing and planning the careers of existing and new officers employees in accordance with job requirements.
- provision of training and otherwise development of both candidates and current job holders so that they can perform tasks effectively and efficiently.
- Continues check up of attendance and leave status of officers and employees and reporting to the CEO.
- Submission of Annual Confidential Report (ACR) of all employees to the CEO.
- Maintenance of updated information regarding all officers and employees
Training Activities:
Training Programs on different
Grounds are arranged here, likely;
A.
Authorized Representative Training.
B.
New Member Training.
C.
New Authorized Representative Training.
D.
Investors awareness Training.
E.
DSE Employee Training (Local & Foreign)
F.
Automated Clearing & Settlement Training.
Moreover, additional training
programs are arranged if any inclusion in the Capital Market.
(4.3) LOGITIC, MAINTENANCE & PROTOCOL
DEPARTMENT
Logistic, Maintenance and
Protocol Department of DSE is involved in providing all types of logistic and
protocol services as per requirement.
FUNCTION OF
LOGISTIC/PROTOCOL DEPARTMENT
- Collections of member’s dues.
- Preparation of bills for listing fees.
- Collection of listing fees.
- Follow up of listing fees realization and receivables from listed companies.
- Maintenance of liaison with banks.
- Dealing with important matters and L/C when necessary.
- Net capital balance collection from members and reporting to SEC.
- Any other duties as and when required.
- Insurance of members and DSE staff.
- Supervision and assurance of the logistic and supply chain of DSE.
- Procurement/purchase of logistic items to run smoothly.
- Monitoring the responsibilities of logistic support units.
FUNCTIONS OF
MAINTENACE DEPARTMRNT
- Maintenance 0f 1250 KVA substation (1250 KVA transformer, 11 KV H.T switch gear, 2000 ALT 400 Emergency control panel).
- Maintenance of 250 KVA & 30 KVA generators.
- Maintenance voltage stabilizer of IT main server & lift power supply.
- Maintenance of lift.
- Maintenance of Photocopier.
- Maintenance of power distribution at all the floors in 9/E and 9/F, DSE.
- Maintenance of the PABX system.
- Maintenance of air cooler of DSE office.
- Taking care of all office, toilet & lighting of 12 floors in DSE.
- Maintenance of all types of electrical applications and supervision of related activities.
- Maintenance of pump (water supply).
(4.4) RESEARCH & DEVELOPMENT & INFORMATION
The Research & Library
Department is concerned with providing assistance to all types of research work
and supervising the DSE library.
FUNCTIONS OF RESEARCH &
DEVELOPMENT INFORMATION DEPARTMENT
- Preparing database for all listed companies.
- Supporting to teachers and students in their research works and projects by providing necessary data listed companies.
- Distribution of required information to members and investors to meet up their quarries regarding listed companies, any regulation, etc.
- Inform the listing department of any announcement regarding company degradation, share addition, etc. which the listing Department sends to IT for announcement.
- Provision of data and information for publication & Public Relation Department for any publication of DSE like Monthly review, Annual report, Profile, Diary, etc.
- Submission of monthly data regarding market trade to SEC.
- Regular provision of data to SEC as per requirement.
(4.5) THE PUBLICATION AND PUBLIC RELATION
The Publication and Public
Relation Department is concerned with two types of activities:
- Publication 2. Public relation
FUNCTION OF PUBLICATION &
PUBLIC RELATION DEPARTMENT
PUBLICATION
Preparation and printing of -
- Monthly review (with half yearly).
- Annual report.
- Diary.
- DSE Profile.
- Members Directory.
- Company Directory.
- All gazette notification published by BG press.
- Supervision of Paper citing.
PUBLIC
RELATION
- Co-ordination with Press and Electronic Media.
- Conduct the Media and others meeting.
- Press release and other related issues.
- Maintenance of all kinds of information
(4.6) SECURITY SECTION
There is another important
section is Security Section. Executive, Security supervisor, Assistant security
supervisor and some guards are working there.
FUNCTIONS OF
SECURITY DEPARTMENT
¨
Preparing roster of duties for all the security
guards of DSE and Security Company.
¨
Regular check up of arrangements for physical
security to ensure a satisfactory security system.
¨
Arrangement of security protection for VIP, VVIP
and foreign? Dignitaries visiting DSE.
¨
Surprise check of security by day and night for
strict maintenance of the security system.
¨
Continuous co-operation and communication with
police department and other law enforcement agencies.
(4.7) ACCOUNTS DIVISION
Accounts Department deals with all
activities relating to the preparation & maintenance of general accounts
and clearing accounts and for assistance to the Deputy Financial controller in
the budgetary control of? DSE
FUNCTION OF
GENERAL ACCOUNTS
¨
Preparation and maintenance of books of accounts
(Journal Entries, Ledger Books, Cash Books, Income & Expenditure Accounts,
Balance Sheet & Cash flow Statement.)
¨
Preparation of monthly Financial Statement.
¨
Preparation of salary payroll.
¨
Bank reconciliation.
¨
Controlling of all software/ Database relating
to general accounts, Petty Cash, Clearing, Salary and Members Bill.
¨
Scheduling of all expenses.
¨
Preparation of all kinds of payment note.
¨
Maintenance of asset register.
¨
Submission of early financial statement to SEC.
¨
Maintenance of member accounts and Provision of
accounting data for members about their own accounts as per requirement.
(4.8) CLEARING & SETTLEMENT
Clearing Accounts is concerned
with the monitoring and verification of clearing accounts related activities.
The main function of clearing accounts is:
- Margin Settlement
- Data collection and processing and preparation of statements.
- Collection and disbursement of payments.
- Banking.
- Clearance.
- Demoted spot trade settlement.
- EX DP
- Preparation & Accounts.
SETTLEMENT
OF MEMBER’S MARGIN:
- Collection of security deposit as margin within trade.
- Disbursement of security after maturity.
- Maintenance of margin account such as demoted shares, FDR, Bank Guarantee.
- Preparation of charges against margin.
DATA
COLLCTING, PROCESSING AND PREPARATION OF STATEMENTS
- Collection & processing of trade related data and for preparation of necessary statements.
- Calculation of Laga charge, Hawla charge and Tax at source.
- Preparation of Receivable and Payable Statements after all adjustments.
- Preparation of Accounting Statements.
COLLECTION AND DISBURSEMENT OF PAYMENTS:
- Collection of payment from selling broker as per Receivable Statement.
- Issuance of cheque to the buying members as per Payable Statement.
- Issuance of cheque to the members against security deposit after adjustment/maturity
- Reconciliation with accounts.
BANKING (GENERAL):
- Assurance of deposit of cheques.
- Assurance of payment order.
BANKING (FUND):
- Management of funds relating to clearing accounts.
- Maintenance of FDR Account.
CLEARANCE:
- Preparation of daily clearance report and submission of report to IT.
- Submission of weekly and monthly clearance reports (Defaulter List to SEC.
- In case of Defaulters.
- Stop all payments.
- Preparation of Buying In/Selling Out order.
- Preparation of the accounts regarding Buying In /Selling out.
- Preparation of resumption order and provision of it for IT.
- Submission of report to SEC regarding the settlement of defaulter members.
DEMATED SPOT TRADE SETTLEMENT:
¨
Assurance of deposit by the buying members to
the bank.
¨
Assurance of share availability of the selling
members their clearing accounts.
¨
Collection of data and preparation of Statement.
¨
Issuance of payment.
EXDP:
¨
Looking after all the reports provided by CDBL
every day.
¨
Assurance of available demated shares buying in
/ Selling out by DSE.
¨
Collection of necessary documents.
PREPARATION OF ACCOUNTS:
- Daily & monthly ledger.
- Daily and monthly clearing accounts.
- Daily and monthly clearing reconciliation.
- Maintenance Tax account daily and monthly.
- Transfer of fines, interest and other charges monthly.
FUNCTION OF CLEARING & SETTLEMENT
DEPARTMENT (SHARE)
GENERAL SHARES:
¨
Reception, reconciliation and delivery of shares
to member houses everyday.
¨
Assurance of share settlement and clearing in
time.
¨
Settlement of margin
¨
Taking necessary actions in case of violation of
margin rule by member firms.
¨
Preparation of list of defaulter members and
adoption of necessary actions against the defaulters.
¨
Preservation of DSE share volt.
¨
Communication with listed companies as and when
requires.
DISPUTED, ODD LOT, BLOCK SHARES
& SPOT TRADE:
¨
Verification of disputed share (fake, reported,
lost, stolen) settlement and correspondence with listed companies and member
firms in this regard.
¨
Supervision of receiving and delivery of good
shares against any defective share.
¨
Arrangement of receiving and delivery of odd lot
shares and block shares.
¨
Settlement of spot transaction of physical
shares.
¨
Settlement of spot transaction of CDBL shares.
¨
In case of default in settlement of spot transaction
of physical shares and CDBL shares, proper reporting for the suspension of
defaulter member.
¨
Settlement of bonus, dividend and other benefits
on demate shares not transferred into CDBL for unavoidable circumstances.
¨
Assurance of share settlement and clearing in
time.
¨
Preparation of defaulter list.
¨
Preparation of selling out and buying in list of
shares.
¨
Communication with listed companies as per
requirement.
DSE FULL SERVICE DP
DSE DP provides DP services to
brokers and dealers who are trading participants that is who cannot provide DP
services to their clients.
DEMATE /
REMATE ACTIVITIES
Completion of all activities
relating to the conversion of shares from physical to electronic from (Demate)
or electronic to physical form (Remate)
¨
Verifications and receiving of physical share in
order to demate shares.
¨
Entrance of shares off line.
¨
Upload of shares on line.
¨
Check up of demate confirmation.
¨
Check up of demate pending status, collection of
pending shares and re-entry of rejected physical shares.
¨
Verification of demate share in order to remate
shares.
¨
Entrance of shares off line.
¨
Upload of shares online.
¨
Check up of remote confirmation.
BO ACCOUNTS
SERVICES
¨
Opening of BO Accounts for beneficiary owners
account holders refereed by trading participants.
¨
Providing services to beneficiary owners in
time.
¨
Reception of pay in form, verification of
signature of BO and existence of shares.
¨
Pay in set up of shares off line and upload
online.
¨
Reception of pay out from members, verification
of signature and the existence of shares.
¨
Approval of pay out by another person and upload
online.
¨
Liaison with issuer to solve the demate problem.
¨
Liaison with BO account holders and answer their
quarries.
¨
Liaison with CEO and other departments.
¨
Liaison with CDBL.
(4.9) OPERATION DIVISON
LISTINF &
MARKET OPERATION
IPO RELATED FUNCTIONS
¨
Processing and evaluation of the draft
prospectus of IPO.
¨
Evaluation of Financial Statements of new
companies to be listed and preparation of the IPO comments for Securities and
Exchange Commission.
LISTED COMPANY RELATED
FUNCTIONS
Communication with all the listed
companies regarding the compliance of relevant rules and regulation.
¨
Assurance of timely disbursement of corporate
announcement.
¨
Monitoring of listed companies for the compliance
of listing Regulations, Company Law and other relevant rules.
¨
Announcement of half yearly and yearly
performance of listed companies through the trading system.
¨
Evaluation of performance of listed companies
and update listed company records.
TRANSFER OF SHARES OUTSIDE
TRADING FLOOR
¨
Processing of approval for transfer of share
outside the trading system.
¨
Processing and recording of all types of
transfer / sale or buy of shares of Sponsors/Directors.
¨
Processing of application of gifting of shares
as well as transfer of shares in special circumstances.
MARKET OPERATION
¨
Taking subsequent action for corporate
announcement as per rules and regulation.
¨
Adoption of all necessary actions required for
Book Closure/Record Date and other corporate benefits.
¨
Trade suspension or trade halt age of listed
companies and members also during the trading hour considering the necessity of
market operations.
¨
Protection of investor’s interest in the listed
companies when any anomaly is observed in DSE.
(4.10) MONITORING, INVESTIGATION & COMPLIANCE
DEPARTMENT
Monitoring and Investigation
Department assists in smooth functioning of capital market. The objective of
this department is to inspect, monitor and have feedback on the member houses
according to securities rules and regulations and settle dispute between
investors and member houses, provide support to settle claims, monitor other
activities of the exchange like activities of DSE DP regarding pay in/ pay out
and other legal matters of the exchange.
Activities of Monitoring,
Investigation & Compliance department.
The main functional areas of the
department are:
- Monitoring
- Investigation
- Legal & Compliance
- Grievance Cell
MONITORING
¨
TWS set up monitoring
¨
Room verification
¨
DP- monitoring
¨
Any other monitoring ordered by CEO regarding
violations of Securities
rules by any
listed company with DSE or any brokerage house.
¨
Company Monitoring ordered by SEC any directed
by CEO.
PROCEDURE OF GENERAL
MONITORING:
Monitoring team generally examine
the following documents :
General Observation (General
documents related with share trading):
- Account opening Form
- Buy Sale order Slip
- Trade confirmation Statement
- Buy/Sale order register
- Money receipt
- Payment Voucher
- Share receive and Delivery certificate
- Broker/dealer license
- Authorize registration certificate
- Client ledger.
- Stock report.
- Bank Account Statement.
- Net Capital Balance position.
- Deed of Margin Agreement between member and investor (if possible).
- Compliance report.
- Compliant register.
Procedure of general monitoring:
Monitoring team generally examine
the following documents:
Special observation (Monitoring House Activities as Depository
participant):
¨ BO
account opening for
¨ Pay
in slip
¨ Pay
out slip
¨ BO
stock report
¨ Find
discrepancies and variability of houses activities and generating report.
¨ Inform
the concern house about their deficiencies.
¨ Aware
them about securities rules and provide feedback to the house to overcome
deficiencies regarding any lapse in operating house activities and also try to
re from them in order to rules and regulations.
¨ Final
report submits to the Securities and Exchange Commission about house status.
Monitoring department monitors the activities of at least 5 brokerage houses in
each Calendar month.
SPECIAL MONITORING
Monitoring Department
conducts special monitoring in brokerage houses according to SEC order through
their inspection report. The procedure is same as general monitoring. The
department conducts some other monitoring from time to time. They are as
follows:
- TWS set up monitoring: Monitoring department inspect the set up of TWS according to TWS installation and user manual.
- Room verification : Monitoring department inspect brokerage house office premises whether they are properly decorated and suitable for business.
- DP – Monitoring : Monitoring Department inspect DP activities of the brokerage house regarding their pay in, pay out, and other activities as DP.
INVESTIGATION
One of the main responsibilities
of Monitoring Department is to ensure compliance with Securities and Exchange
rules and investigate any fraudulent activities in respect of securities market
operations.
LEGAL
This department assists DSE in various legal matters such as
¨
Correspondence with outside solicitors if any
litigation arise against DSE.
¨
Assists in any other legal matters of DSE.
¨
Settlement of dispute that arises out by death
of members or un settled claim by the member.
¨
Arrangement of hearing between appellant accused
member house and settlement of any undue claim against the house.
GRIEVANCE CELL
¨ Assistance
in the settlement of dispute between client complainant and member houses.
¨ Arrangement
of necessary legal procedures to settle investor claims.
¨ Assistance
in arrangement of hearing of complaints and also adoption of necessary steps
and correspondence.
(4.11) SURVEILLANCE DEPARTMENT
Another important department of
Dhaka Stock Exchange is Surveillance Department.
Its functions broadly describe in
under below:
FUNCTIONS OF SURVEILLANCE
DEPARTMENT:
PRICE MONITORING
On line Surveillance:
For detecting potential market
abuses at a nascent stage to reduce ability of the market participants to
unduly influence the price & volume of the scripts traded at DSE by
accessing into orders & trades of members.
Off-Line Surveillance: Monitoring of
- High/Low difference in prices.
- Percentage change in prices over a week/fortnight/month.
- Top N scrip by Turnover a week/Fortnight/month.
- Trading in infrequently traded scrip.
- Scrip’s hitting new high/low price, etc.
INVESTIGATION:
Conducting in-depth
investigations based preliminary enquiries/analysis of trading of the scrip. In
Case of irregularities observed, necessary actions are initiated or
investigation case is forwarded to SEC through the CEO, if necessary.
Surveillance Actions:
- Warning to member – verbal/written to members through the CEO are issued when market irregularities in the scrip are suspected
- Impositions of penalty/suspension – penalize or suspend the members through the CEO who are involved in market irregularities, based on the input/evidence available from investigation report.
Rumor verification:
- Liaising with Compliance Officers of companies to obtain comments of the company on various price sensitive corporate news items appearing in selected News Papers.
- Comments received from the companies are disseminated to the market by way of online news bulletin.
- Investigations based on rumor verifications are carried out, if required, to detect cases of suspected insider trading
Position Monitoring:
The Surveillance Department
closely monitors outstanding exposure of members on a daily basis. For this
purpose, it observes various off-line market monitoring reports. The reports
are scrutinized to ascertain whether there is excessive purchase or sale
position build up compared to the normal business of the member, whether there
are concentrated purchases or sales, whether the purchases have been made by
inactive or financially weak members and even the quality of scrip’s is
considered to assess quality of exposure. The following key areas are examined
to assess the market risk involved –
Online Monitoring of Broker Position
Surveillance closely monitors
broker’s gross turnover exposure for ensuring margin calls in time.
- B/S Statement of Trading Members: Scrutinizing the statement on daily basis in order to keep watch on the exposure of the members & ascertain the quality of exposures.
- Concentrated B/S: It is considered a risky issue. In case, such a situation is noticed, fundamentals of the scrip, their daily turnover, their nature of transaction are ascertained.
- B/S of scrip having thin trading: It is closely scrutinized as comparatively high market risk is involved in trading in such scrip. Details of trades in such scrip, if necessary, are called from members to assess the market risk involved & decide on.
- Verification of Institutional Trade: The institutional trades executed by the trading members are verified to ascertain the genuineness of trades.
- Verification of Foreign Trade: The foreign trades executed by the trading members are verified to ascertain the genuineness of trades.
- Verification of Cross Reporting Trade: The report crossing trades executed by the trading members are verified to ascertain the genuineness of trades.
- Verification of D Form Trades: The D Form trades executed by the trading members (Dealers) are verified to ascertain the genuineness of trades.
- Verification of Sponsor’s Trade: The sponsor’s trades executed by the trading members are verified to ascertain the genuineness of trades.
- Snap Investigation: To carry out, wherever considered necessary, preliminary investigation of certain dealings to verify irregularities. Further actions, viz., referring the case for detailed investigation, referring the case to the SEC, depending on the findings preliminary investigation.
- Market Intelligence: The rumors floating in the market are verified with the data available with DSE, Newspapers, Television news channels & Reuters to ascertain the national & global factors affecting the market sentiments.
- Review block Trades: To determine a) whether the block was executed at a price, even if at a discount or premium which was in line with other trading of the stock. b) Whether there was any news on the company, which caused the price, increase or decrease subsequent to the block transaction.
- Review List of Settlement Failures: To identify a) brokers with frequent failures b) a particular stock with a pattern.
- Verification of Company Accounts: To scrutinize company announcements, company reports, auditors qualification & other notes of special interests in the published accounts of such company.
- Verification of Company Accounts: To scrutinize company announcements, company reports, auditors qualification & other notes of special interests in the published accounts of such company.
- Review of Media Information: To scrutinize press articles other media on the daily basis, the news relevant to the share prices of companies.
- Monitoring on newly Listed Stock: To review all activities of a newly listed stock for the first ½ weeks to identify any abnormal deal.
- Development of Good Liaison: To develop & maintain good liaison with staff members of SEC & listed companies & member firms as well.
- Development of market contacts & to picking up Intelligence.
REPORTING
- Preparation of daily market report to reflect the state of the market & share prices at a specified time & distribution to the CEO.
- Submission of routine weekly report of market monitoring of Surveillance Department to the Commission.
- Submission of routine weekly report of foreign trades to Commission.
- Off & on inspection to member firms, preparation of reports thereof & forwarding to the CEO.
- Instant reporting to the CEO following his instruction.
- Reporting to the Commission following their enquiry in particular area of brokers/scrapes.
- Any other activities as & when directed by the CEO.
FUNCTION OF INTERNAL AUDIT
Functionalities:
¨
Identification of irregularities in any payment
or lapse of any documents.
¨
Random check up of DSE store to find our
irregularities.
¨
Regular check up of petty cash.
¨
Identification of over expenses from petty cash.
¨
Supervision and examination of entrance of
income in DSE Accounts.
¨
Submission of weekly or monthly report on petty
cash account to CEO.
¨
Any other action as per requirement.
SWOT ANALYSIS
The solution is actually twofold. Firstly, there
needs to be structural changes in the capital markets and secondly, there needs
to be more supply of good companies getting listed.
Let's look at the structural changes first. What
I mean by structural changes is, in essence, changes required at the DSE, CSE
and the SEC. Let's look at the structural changes at the stock exchanges first
which can be brought about through demutualization. Demutualization is the
process of transformation from members associations into for-profit
corporations. Stock exchanges across the globe have rethought their business
strategy and model due to the simultaneous convergence of a number of powerful
developments in order to find ways of how best to survive. And, in the process
the exchanges have evolved towards new corporate, legal and business models to
strengthen governance and face competition through the process of
demutualization. Currently, the DSE and the CSE operate under a modularized
structure. Under demutualization the mutual ownership structure will change to
a share ownership structure. The process entails first converting memberships
into shares, which may or may not be followed by a public issue. Ownership and
trading privileges are effectively separated. Stockbrokers are no longer owners
but customers of the exchange. Directors are elected by shareholders and
answerable to them. The reasons for demutualization are many but here are a few.
First and most importantly, in the case of Bangladesh,
it is of rationalized governance. The corporate model of the exchange under
demutualised structure will enable management to take actions that are in the
best interests of customers and the exchange itself. With the separation of
ownership and trading privileges, an exchange will achieve greater independence
from its members with respect to its regulatory functions. There will be the
requisite degree of transparency. Demutualised exchanges will be forced to
account to their shareholders regarding the bottom line as well as corporate
governance.
Secondly, there will be more investor
participation. The new corporation will be more profit orientated due to
shareholder accountability. Unlike a mutual structure where often only
broker-dealers a maybe member, a demutualised exchange affords both
institutional and retail investors the opportunity to become shareholders. A
demutualised exchange will have greater flexibility to accommodate the needs of
institutional investors as customers, and potentially, as owners.
Thirdly, it is the resources for capital
investment. A competitive stock exchange must be able to respond quickly to
global competitive forces and technological advances. With the capital raised from
initial public offerings or private investment and a heightened awareness of
accountability to stakeholders, a stock exchange should have both the incentive
and the resources to invest in the competitiveness of its information systems.
So to be competitive, products and services must not only be timely and cost
effective, but also reliable.
Conclusion
The role of Dhaka stock exchange
limited has been remarkable in recent years. T has gained the confidence of
public and is able to attract more and more funds. At the end of last decade
what was impossible has now become possible and any company listed with Dhaka
Stock Exchange can expect to raise sufficient funds through it.
The Dhaka stock exchange has been
able to attract a sufficient volume of foreign funds and the number of foreign
investors is growing day by day. If this trend continues Dhaka stock exchange
market will be efficient one in the near future. At the end if the year 2010
Dhaka stock exchange is expected to become one of the major stock markets in
this region.
So far we have observed that
Dhaka stock exchange has suffered from ups and downs and it can be attributed
to the efficiency of the members and some of the consistent policies of the
government with more experience. In the coming year in dealing with such busy
capital market both the Dhaka Stock exchange members and government policy
makers are expected to be more consistent in their practices and policies.
Their product role in the future will certainly be a major factor in the
performance of Dhaka stock exchange market.
References
v
Annual Report, published by Dhaka stock Exchange
limited 2008 and 2009
v
Monthly review, published by Dhaka stock
exchange limited
v
Research and development department, Dhaka stock
exchange ltd
v “Capital
market: Structural Problems and solution” THE DAILY STAR, Thursday, April 14,
2011.
