profile of dhaka stock exchange by khandakar niaz morshed
TRANSCRIPT
Chapter 1Introduction
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1.1 Introduction:
To achieve the desire objective for growth and prosperity the world economy always changed to
integrate itself in the parts of the world. Both developed and underdeveloped countries are
supposed to move the wheel of socioeconomic development by making resources to facilitate the
economic growth through appropriate allocation of the same. In Bangladesh the idle money is
not properly canalizes due to some non availability of investment arena with a safe return of both
principle and interest thereof. Most of the potential entrepreneurs often gather in the capital
market to meet the capital requirements. The surplus units of the society are not supposed to
invest their money. So, they are often ready to supply their money to purchase securities from the
capital markets. As a result stock exchange plays a crucial role to mobilize capital or the
development of a capital market. Dhaka Stock Exchange, the frontline organization for the
securities market development of Bangladesh, was incorporated on 28th April, 1954 as East
Pakistan Stock Exchange Association Limited which started formal trading in 1965 at
Narayangonj. Subsequently, in 1962 it was renamed as Dhaka Stock Exchange Ltd. (DSE)
1.2 Background of the Study:
This paper has been prepared based on different activities of the Dhaka Stock Exchange (DSE).
This paper has been prepared based on the surrounding things of Dhaka Stock Exchange which
include its history to work. All information is secondary and collected from different books
published by the Dhaka Stock Exchange and its informative website. Beside Dhaka stock
Exchange Library have adequate books to know properly about Dhaka Stock Exchange.
1.3 Objective of the study:
The study carries much importance in view of the fact that the economic development of
Bangladesh is closely linked with the strong and healthy financial organizations, which facilitate
mobilization of domestic and foreign funds on a large scale. Investment organizations are doing
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their jobs more competitively now a day. Attracting the people to save their money by
developing various products and schemes, investing the fund in a field where they can profitable
in long way, is the main focus of this study. This research gap induced me to undertake the
study. It is hoped that the findings of the study will be useful for the readers and young learners
to get knowledge about the topic. It will also add to existing stock of reports in the library
section. The main objective of practical orientation on stock market is to get a clear idea about
investment environment, how it runs and what function it does. Again, the information of DSE
totally enhance the trainee gets a chance to familiarize him with a new knowledge. Furthermore,
the orientations is very useful to detect whether the theoretical knowledge match with real life
scenario or not.
Broad Issue: To know the history of Dhaka Stock Exchange with its different activities, along
that emphasize on its work procedure with technical terms and the perfect use of it at field lavel.
Specific Issue: In addition to the principal objective, the following are some of the common but
significant objectives of the study:
1. To know about the nature of the Dhaka Stock Market.
2. To know about the scope of investment in the stock market.
3. To know about the work station of Dhaka stock Exchange and its way of settlement of money.
4. To know about the procedure of securities exchange commission
1.4 Scope of the Study:
Though DSE do a lot of activities like listing of different stock, bond, Treasury bond etc, from
this thesis paper reader can know proper function of DSE with its latest rules and regulations. I
include all the secondary and primary data which are currently exposure of DSE.
1.5 Methodology of the study:
1 Data collection: For conducting the study I used the following Method-
Collection of primary data: Some study-related data are collected from
designing questionnaires, personal interview, and from related instruments.
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Collection of secondary data: to prepare the report, I used many data and literary
information for which I had depended on secondary sources. Secondary Sources include -
I. Monthly review of Dhaka Stock Exchange
II. Different journals and magazines and
III. Other related books.
Along with these, Observation is another method that was given emphasis in the study.
1.6 Limitation:
To do the thesis I have face some problems as I working in a securities, I have to find out time and proper way to collect the information. Moreover, the rules are complicated and they are not so easy to find out and I have to study lot of listed Books of DSE to know the Things properly.
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Chapter 2
Literature Survey
2.1 What is Stock Exchange?
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A organized marketplace in which stocks, Common Stock Equivalents and bonds are traded by
members of the exchange, acting both as agents (brokers) and as principals (dealers or traders).
Most exchanges have a physical location where brokers and dealers meet to execute orders from
institutional and individual investors to buy and sell securities. Each exchange sets its own
requirements for membership. Investors are generally not given free access to trading systems.
Entry into the exchange's systems is intermediate by brokers. Brokers may simply route orders to
exchanges. They sometimes make decisions as to what exchange, and what system within the
exchange, should process various parts of an order. In open outcry markets, brokers also
physically represent orders on the floor of the exchange.
Stock exchanges are formally organized secondary markets for financial assets that have already
been issued in primary capital markets. Stock markets have become the hallmark of successful
modern capitalist economies, despite the frequency of volatile price movements that lead to
excessive speculation followed by panics and despite repeated scandals. They play an important
role, however, for both the primary capital market and the mobilization of bank credit within any
economy, basically by providing liquidity for the initial investors in government or corporate
debt or incorporation stock. The assurance that a ready market exists for the sale of an investor's
holdings in case of second thoughts, emergencies, or better alternatives for investment makes it
easier to place debt or equity in the first place on the primary capital market. The daily pricing of
all such financial products on a stock exchange also makes them ideal instruments as collateral
for loans. In sum, stock exchanges are important complements to the efficient operation of the
rest of an economy's financial sector.
The historical development of worldwide stock exchanges shows that three features are essential
for their long-term success: a large stock of homogeneous, readily identified financial assets
available to the public; a numerous and diverse customer base that is aware of the financial assets
available; and a set of trustworthy intermediaries to handle trades of the various financial
products among the customers.
2.2 History of Stock Exchange
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The history of stock exchanges can be traced to 12th century France, when the first brokers are
believed to have developed, trading in debt and government securities. Unofficial share markets
existed across Europe through the 1600s, where brokers would meet outside or in coffee houses
to make trades. The Amsterdam Stock Exchange, created in 1602, became the first official stock
exchange when it began trading shares of the Dutch East India Company. These were the first
company shares ever issued.
By the early 1700s there were fully operational stock exchanges in France and England, and
America followed in the later part of the century. Share exchanges became an important way for
companies to raise capital for investment, while also offering investors the opportunity to share
in company profits. The early days of the stock exchange experienced many scandals and share
crashes, as there was little to no regulation and almost anyone was allowed to participate in the
exchange.
Today, stock exchanges operate around the world, and they have become highly regulated
institutions. Investors wanting to buy and sell shares must do so through a share broker, who
pays to own a seat on the exchange. Companies with shares traded on an exchange are said to be
'listed' and they must meet specific criteria, which varies across exchanges. Most stock
exchanges began as floor exchanges, where traders made deals face-to-face. The largest stock
exchange in the world, the New York Stock Exchange, continues to operate this way, but most of
the world's exchanges have now become fully electronic.
2.3 Function of Stock Exchange
Although the stock exchange market has multiple functions, its main activities are Two:
To promote the savings and for them to be canalized towards of carrying through
investment projects that otherwise wouldn’t be possible you need that the issuing
institution of the securities to be admitted for quoting. The negotiations will be done on
the primary market.
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To provide liquidity to the investors. The investor can recuperate the money invested
when needed. For it, he has to go to the stock exchange market to sell the securities
previously acquired. This function of the stock market is done on the secondary market.
Other functions of the stock exchange market as an organization are:
To guaranteed the legal and economic security of the agreed contracts.
To provide official information about the quantities that are negotiated and of the quoted prices.
To fix the prices of the securities according to the fundamental law of the offer
and the demand. Specifying a bit more and centering on the two main agents that
intervene in the market, investors and companies, we could do the following
classification: It permits Functions done by the stock exchange market in favor of the
investor; it permits him the access to the profitable activities of the big companies.
It offers liquidity to the security investments, through a place in which to sell or buy
securities.
For the investor to have a political power in the companies in which he invests its
savings due that the acquisition of ordinary shares gives him the right (among other
things) to vote in the general shareholders meetings of the company in question.
It offers the possibility of diversifying your portfolio by enlarging the field of
strategy of investments due to alternative options, as could be the derived market, the
money market, etc. With respect to the function done by the stock exchange market in
favor of the
Companies:
It supplies them with the obtaining of long-term funds that permits the company
to make profitable activities or to do determine projects that otherwise wouldn’t be
possible to develop for lack of financing. Also, this funding signifies a less cost than if
obtained at other channels.
The securities quoted at the stock exchange market usually have more fiscal
purpose advantages for the companies.
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It offers to the company’s free publicity, which in other way would suppose
considerable expenses. The institution is objecting of attention of the media (television,
radio, etc.) in case any important change in its owners (the share holders).
2.4 Stock Exchange in Bangladesh
Bangladesh has two Stock Exchanges, Dhaka Stock Exchange (DSE), established in 1954 where
trading is conducted by Computerized Automated Trading System and Chittagong Stock
Exchange (CSE), established in 1995 which is also conducted by Computerized Automated
Trading System . All exchanges are self- regulated, private sector entities which must have their
operating rules approved by the SEC
2.4.1 History of Dhaka Stock Exchange in Bangladesh
The Necessity Of Establishing A Stock Exchange In The Then East Pakistan Was First Decided
By The Government When, Early In 1952.It Was Learnt That The Calcutta Stock Exchange Had
Prohibited The Transactions In Pakistani Shares And Securities. The Provincial Industrial
Advisory Council Soon Thereafter Set Up An Organizing Committee For The Formation Of A
Stock Exchange In East Pakistan. A Decisive Step Was Taken The Second Meeting Of The
Organizing Committee Held On The 13th March, 1953. In The Cabinet Room, Eden Building,
Under The Chairmanship Of Mr. A. Khaleeli, Secretary Government Of East Bengal ,
Commerce, Labor And Industries Department At Which Various Aspects Of The Issue Were
Discussed In Detail. Then the Central Governments Proposal Regarding the Karachi Stock
Exchange Opening a Branch at Dhaka. , did Not Find Favor with the Meeting Who Felt That
East Pakistan Should Have an Independent Stock Exchange. It Was Suggested That Dhaka
Narayanganj Chamber Of Commerce & Industry Should Approach Its Members For Purchase Of
Membership Cards At RS.2000 Each For The Proposed Stock Exchange. The Location of the
Exchange It Was Thought Should Be either Dhaka Narayanganj or Chittagong. An Organizing
Committee Was Appointed Consisting Of Leading Commercial And Industrial Personalities Of
The Province With Mr. Mehdi Ispahani As The Convener In Order To Organize The Exchange.
The Chamber Informed Its Members And Members Of Its Affiliated Associations Of The
Proceedings Of The Above Meeting, Requesting Them To Intimate Whether They Were
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Interested In Joining The Proposed Stock Exchange. This Was Followed By A Meeting, At The
Chamber Of About 100 Persons Interested In The Formation Of The Exchange On 07.07.1953.
The Meeting Invited 8 Gentleman To Become Promoters Of The Exchange With Mr. M Mehdi
Ispahani As The Convener And Authorized Them To Draw Up The Memorandum And Article
Of Association Of The Exchange And Proceed To Obtain Register Under The Companies
Act.1913. The Other 7 Promoters Of The Exchange Were Mr. J M Addision-Scott, Mr.
Mhodammed Hanif, Mr. A C Jain, Mr. A K Khan, Mr M Shabbir Ahmed And Mr. Sakhawat
Hossin.
It Was Also Decided That Membership Fee Was To Be Rs.2000 And Subscription Rate At 15
Per Month. The Exchange Was To Consist Of Not More Than 150 Members. A Meeting Of The
Promoters Was Held At The Chamber On 03.09.1953 When It Was Decided To Appoint Orr
Dignam & Co., Solicitors To Draw Up The Memorandum And Articles Of Association Of The
Stock Exchange Based On The Rules Of Stock Exchange Existing In Other Countries And
Taking Into Account Local Conditions.
The 8 Promoters Incorporated The Formation As The East Pakistan Stock Exchange Association
Ltd. on 28.04.1954. As Public Company, On 23.06.1962 The Name Aws Revised To East
Pakistan Stock Exchange Ltd. Again On 14.05.1964 The Name Of East Pakistan Stock Exchange
Limited Was Changed To "Dhaka Stock Exchange Ltd."
At The Time Of Incorporation The Authorized Capital Of The Exchange Was Rs. 300000
Divided Into 150 Shares. Of Rs. 2000 each and by an extra ordinary general meeting adopted at
the extra ordinary general meeting held on 22.02.1964 the authorized capital of the exchange was
increased to Tk. 500000 divided into 250 shares of Tk. 2000 each. The paid up capital of the
exchange now stood at Tk.460000 dividend into 230 shares of Tk. 2000 each. However 35 shares
out of 230 shares were issued at TK. 80, 00,000 only per share of TK. 2000 with a premium of
TK. 79, 98,000.
Although incorporated in 1954, the formal trading was started in 1956 at Narayanganj after
obtaining the certificates of commencement of business. But in 1958 it was shifted to Dhaka and
started functioning at the Narayangonj chamber building in Motijheel C/A.
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On 1.10.1957 the stock exchange purchase a land measuring 8.75 Kattah at 9F Motijheel C/A
from the Government and shifted the stock Exchange to its own location in 1959.
2.4.2 Listed Companies in DSE at October 2010:
Number of listed companies in Dhaka Stock Exchange
Year Number of listed
companies
Growth in %
Year Number of listed
companies
Growth in %
1990-91 149 1999-00 229 4.566
1991-92 153 2.685 2000-01 234 2.183
1992-93 166 8.497 2001-02 248 5.983
1993-94 201 21.084 2002-03 251 1.210
1994-95 192 -4.478 2003-04 259 3.187
1995-96 192 6.771 2004-05 251 -3.089
1996-97 203 5.729 2005-06 269 7.171
1997-98 213 4.926 2006-07 273 1.487
1998-99 219 2.817
Descriptive statistics of number of
listed companies
Mean Standard deviation
Minimum Maximum Average growth
rate
217.765 39.006 149.000 273.000 4.421%
Data source: Compiled from different issues of monthly review, DSE.
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Total company Listed at present: 442
Company Listing by Alphabetical Order Below:
AB Bank Limited ACI Limited. ACI Formulations Limited ACI 20% Convertible Zero Coupon
Bonds Aftab Automobiles Agni Systems Ltd. Agrani Insurance Co. Ltd. Aims 1st M.F. Al-Haj
Textile Al-Arafah Islami Bank Ambee Pharma AMCL (Pran) Anwar Galvanizing Apex
Adelchi Footwear Ltd. Apex Foods Apex Spinning. Apex Tannery Aramit Aramit Cement
Asia Insurance Limited Asia Pacific General Insurance Co. Ltd. Atlas Bangladesh Aziz Pipes
Bangas Bank Asia Ltd. Bata ShoeBATBC Bay Leasing & Investment Limited BD.Autocars
BDCOM Online Ltd. Bangladesh Finance and Investment Co.Ltd Bangladesh Lamps Bd.Thai
Aluminium Bd. Welding Electrodes Beach Hatchery Ltd. Beacon Pharmaceuticals
LimitedBerger Paints Bangladesh Ltd. BEXIMCO BEXTEX Ltd. BGIC Bangladesh Industrial
Fin. Co. Ltd. BOC BangladeshBRAC Bank Ltd. BSCBSRM Steels Limited) Beximco Pharma
Beximco Synthetics
Central Insurance City Bank City General Insurance Co. Ltd. CMC KamalConfidence
CementContinental Insurance Ltd. Chittagong Vegetable
The Dacca Dyeing & Manufacturing Co.Ltd. Daffodil Computers Ltd. Delta Brac Housing
Finance Corp. Ltd. DBH First Mutual Fund Aramit Cement Ltd. Bangladesh Luggage Ind. Ltd.,
BD Welding Electrodes Ltd, Bangladesh Zipper Ind. Ltd. Beximco Denims Ltd. Beximco
Fisheries Ltd. Beximco Knitting Ltd. Beximco Textiles Ltd. Delta Life Insurance Delta Spinners
Ltd. Dhaka Electric Supply Company Ltd. Dhaka Bank Dhaka Insurance Limited Desh
Garmants Dulamia Cotton Dutch-Bangla Bank
Eastern Insurance Eastland Insurance Eastern Lubricants Eastern Bank EBL First Mutual Fund
Eastern Cables Eastern Housing Export Import (Exim) Bank of Bangladesh
FAREASTLIF (Fareast Islami Life Insurance Co. Ltd. )
Federal Insurance
Fidelity Assets & Securities Company Ltd Fine Foods Limited First Security Islami Bank
Limited First Lease Finance and Investment Ltd. Fu-Wang Ceramic Fu Wang Food
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Gemini Sea Food Glaxo SmithKline Global Insurance Ltd. Golden Son Ltd. Grameenphone
Ltd. GQBALLPEN (GQ Ball Pen Grameen Mutual Fund One Grameen One : Scheme Two
Green Delta Mutual Fund Green Delta Insurance
Hakkani Pulp & Paper
Heidelberg Cement Bd.
H.R.Textile
IBBL Mudaraba Perpetual Bond The Ibn Sina ICB ICB AMCL 1st NRB Mutual Fund ICB
AMCL 2nd NRB Mutual Fund ICB AMCL Third NRB Mutual Fund ICB AMCL 1st M.F.
ICB AMCL Second Mutual Fund ICB Employees Provident MF 1: Scheme 1 ICB Islamic
Bank Limited ICB AMCL Islamic Mutual Fund IDLC Finance Ltd. IFIC Bank IFIC Bank 1st
Mutual Fund International Leasing & Financial Serv.L Imam Button In Tech Online Ltd.
Industrial Prom. & Dev. Co. of BD Ltd. Islami Bank Islamic Finance & Investment Ltd. Islami
Insurance Bangladesh Limited Information Services Network
Jamuna Bank Ltd.
Jamuna Oil Company Limited
Janata Insurance
Jute Spinners
L
LAFARGE SURMA CEMENT LTD.
LankaBangla Finance ltd.
Legacy Footwear
Libra Infusions Limited
Makson Spinn Mills Limited Malek Spinning Mills Ltd. Marico Bangladesh Limited Meghna
Condensed Milk Meghna Cement Meghna Life Insurance Co. Ltd. Meghna Pet Industries
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Karnaphuli Insurance
Kay and Que
Keya Cosmetics
Keya Detergent
Kohinoor Chemicals
Khulna Power Company Limited
Mercantile Bank Ltd. Mercantile Insurance Co. Ltd. Metro Spinning MIDAS Financing Ltd.
Miracle Ind. Mithun Knitting Monno Ceramic Monno Jutex Monno Jute Stafflers Meghna
Petroleum Limited Mutual Trust Bank Ltd.
Ocean Containers Limited
Olympic Industries
One Bank Limited
Padma oil Company Ltd Paramount Insurance Company Ltd. Peoples Insurance Phoenix
Finance 1st Mutual Fund Pharma Aids Phoenix Insurance Phoenix Finance and Investments
Ltd. Pioneer Insurance Peoples Leasing and Fin. Services Ltd. Popular Life First Mutual Fund
Popular Life Insurance Co. Ltd. Power Grid Company of Bangladesh Ltd. Pragati Insurance
Pragati Life Insurance Ltd. The Premier Bank Ltd. Premier Leasing & Finance Limited Prime
Bank 1st ICB AMCL Mutual Fund Prime Bank Prime Finance & Investment Ltd. PRIME
INSURACE Prime Islami Life Insurance Ltd. Prime Textile Progressive Life Insurance Co.
Ltd. Provati Insurance Company Limited Pubali Bank Purabi Gen. Insurance
Quasem Drycells
Rahima Food Rahim Textile RAK Ceramics (Bangladesh) Limited Rangpur Foundry Reckitt
Benckiser(Bd.)Ltd. Reliance Insurance Renata Ltd. Republic Insurance Company Limited
R.N. Spinning Mills Limited Rupali Bank Rupali Insurance Rupali Life Insurance Company
Limited
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National Life Insurance
Navana CNG Limited
NBL
NCCBL
National Housing Fin. and Inv. Ltd.
Nitol Insurance Co. Ltd.
Northern General Insurance Company Ltd.
National Polymer
National Tea
National Tubes
Safko Spinnings Saiham Textile S. Alam Cold Rolled Steels Ltd. Samorita Hospital Sandhani
Life Insurance Summit Alliance Port Limited Savar Refractories Shahjalal Islami Bank Ltd.
Social Islami Bank Limited Singer Bangladesh Sinobangla Industries Sonali Aansh Sonar
Bangla Insurance Ltd. Sonargaon Textiles Southeast Bank Shinepukur Ceramics Limited
Square Textile Square Pharmaceuticals Ltd. Standard Ceramic Standard Insurance Limited
Standard Bank Limited Stylecraft Limited Summit Power Limited T05Y0715 – T5Y1214
United Commercial Bank Ltd.
United Leasing
Union Capital Limited
United Airways (BD) Ltd.
United Insurance
Usmania Glass
Uttara Bank
Uttara Finance
First Janata Bank Mutual Fund
1st Bangladesh Shilpa Rin Sangstha M.F. 1st ICB M.F.
Prime Finance First Mutual Fund 2nd ICB M.F. 3rd ICB M.F. 4th ICB M.F. 5th ICB M.F. 6th
ICB M.F.7thICB M.F. 8th ICB M.F.
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Chapter 3
About Dhaka Stock Exchange
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3.1 Board of Directors (At present ‘2010):
Name Office Address Residence Address Photograph
Mr. Md. Shakil Rizvi
President, DSE
Room No: 905, DSE Annex Building (8th Floor) 9/E, Motijheel C/A,Dhaka-1000 Phone: 7175716, 9570985, 7166096, 7170993-4PABX :9564601, 7175705-9 Ext- 429
Mobile: 01715864740Email: [email protected]
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Mr. Mohammed Nasir Uddin Chowdhury
Senior Vice-President, DSE
Room No. 322 9/E, Motijheel C/A, Dhaka-l000Phone: 9561868, 9570496, 7174256, 7174315Fax: 9555384, 9562207
Mobile : 01819-213180 Email: [email protected] [email protected]
Mr. Md. Rafiqul Islam
Vice-President, DSE
Room No - 901 (8ht floor) 9/E, Motijheel C/A, Dhaka-l000 Phone: 7175717, 7168960 PABX: 9564601 Ext-762 Fax: 9569917
Mobile: 01711-526213
Mr. Md. Rakibur Rahman
Director, DSE
Room No - 508 , Stock Exchange Building , 9/F , Motijheel C.A., Dhaka-1000 Ph: 9551960, 9559925,PABX : 9564601, 7175705-9 Ext. 508
Navana VillaFlat No. 201, Plot No. 10 Road No. 118 Gulshan, Dhaka Phone: 8823500, 9895837 Mobile: 01819-219396
Mr. Ahmed Iqbal Hasan
Director, DSE
Suite: 735 & 736, DSE Annex Building-1, 9/E, Motijheel Commercial Area, Dhaka-1000. Phone: 880-2-7168513, 7174449,7174369.
Phone: 9116517 Fax: 880-2-9555317 E-mail: [email protected]
Mr. Saiful Islam
Director, DSE
Suite No. 1002-3 9/E, Motijheel C/A,Dhaka-1000Phone: 9561070, 9561232, 9564959, 9569302Fax: 9562254, 9564991
Apartment 2B,House No.16,Road No. 01,Baridhara Diplomatic Zone,Dhaka-1212 Res: 8859055Mobile : 01711-546802
Mr. Md. Feroz Khan
Director, DSE
Room No - 313 (2nd Floor) Stock Exchange Building 9/F, Motijheel C/A, Dhaka-l000 Phone: 9552390,9561667 PABX:9564601 Ext-313
Phone: 8810256 Mobile: 01711-548744
Mr. Khwaja Ghulam Rasul
Director, DSE
Room # 703, 704 (6th Floor), Stock Exchange Building 9/F, Motijheel C/A, Dhaka-l000 Phone: 9550515, 9560948. PABX: 9564601, 7175705-9 Ext. 751 Fax: 880-2-9553907 E-mail: [email protected],
195, Elephant RoadBara Moghbazar, Dhaka-1217 Ph: 9340616
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Mr. Sharif Ataur Rahman
Director, DSE
Swantex Court Building (2nd floor), 9/I, Motijheel C/A, Dhaka-1000.Phone: 9565899, 9565900, 9559265.PABX : 9564601, Ext :149.Fax : 88-02-9564619.E-mail : sar @yahoo.com
R# 6, H #14, Flat # 604,Gulshan -1, Dhaka-1212.
Mr. Md. Shahjahan
Director, DSE
Room No - 213 Stock Exchange Building 9/F, Motijheel C/A, Dhaka-l000 Phone: 9551403 PABX:9564601,7175705-09 Ext-213
Phone: 9882204Mobile: 01711 536876
Ms. Lailun Nahar Ekram
Director, DSE
House No. - 8A, Road No. - 50, Gulshan-2, Dhaka - 1212 Phone: 9887423, 9892714Fax: 9894877
House No. 14 (5th Floor), Road No.- 140, Gulshan - 01,Dhaka - 1212Res: 8855098Mobile : 01711-567122
Mr. Masudul Haque
Director, DSE
Suite No. - 603 (5th Floor), Modhumita Building, 158-160 Motijheel C/A, Dhaka-1000Phone: 7174368, 7174451, 9561993
116, Bashir Uddin Road, Kalabagan, Dhanmondi,Dhaka-1205Res: 9115571, 8144836Mobile : 01711-542131
3.2 DSE Management:
Chief Executive Officer Satipati Moitra, M.Com, FCMA
PABX : 9564601,7175705-9Email : [email protected], [email protected]
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Chief Operating OfficerBrig Gen Md Zahurul Alam, ndc, psc (on LPR)
Phone: 9564601,7175703-11, Ext-268Mobile: 01730700610, 01753747474Email : [email protected], [email protected]
Chief Technology Officer A. S. M. Khairuzzaman M.Sc. in AP & Electronics, Commonwealth MBA, FBCS
Phone: 9564601,7175703-11, Ext-123Email : [email protected], [email protected], [email protected]
General Manager & SecretaryShaikh Mohammadullah, MBA (IBA), FCS
Phone: 9564601,7175705-9, Ext-102Mobile: 01713333224Email : [email protected], [email protected]
General Manager (Finance & Accounts)
Jiban Chandra Das, FCA
Phone: 9564601,7175705-9, Ext-152Mobile: 01730336965Email : [email protected], [email protected]
3.3 Function of Dhaka Stock Exchange :
The major functions are:
- 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)
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- Gifting of share / granting approval to the transaction/transfer of share outside the
trading system of the exchange (As per Listing Regulations 42)
- Market Administration & Control.
- Market Surveillance.
- Publication of Monthly Review.
- Monitoring the activities of listed companies. (As per Listing Regulations).
- Investors grievance Cell (Disposal of complaint by laws 1997).
- Investors Protection Fund (As per investor protection fund Regulations 1999)
- Announcement of Price sensitive or other information about listed companies
through online.
3.4 Legal Status:
The Dhaka Stock Exchange (DSE) is registered as a Public Limited Company and
its activities are regulated by its Articles of Association rules & regulations and
bye-laws along with the Securities and Exchange Ordinance, 1969, Companies Act
1994 & Securities & Exchange Commission Act, 1993
3.5 DSE Indices:
Algorithm of DSE Indices :
Index Calculation Algorithm (according to IOSCO Index Methodology):
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Yesterday's Closing Index X Current M.CapCurrent Index = -------------------------------------------------------------- Opening M.Cap
Yesterday's Closing Index X Closing M.CapClosing Index = -------------------------------------------------------------- Opening M.Cap
Current M.Cap = ∑ (LTP X Total no. of indexed shares)Closing M.Cap = ∑ (CP X Total no. of indexed shar
There are three indices in the DSE as follows:
Sl.No Index Name Base Index Remarks
1 DSI (all shares) 350 (as on 01-11-1993)
2DGEN (A, B, G & N)
817.63704 (as on 24-11-2001)SEC directive regarding index was on 17-11-2001
3 DS20 1000 (as on 01-01-2001)
Abbreviations and Acronyms:
M. CAP – Market Capitalization
DSE – Dhaka Stock Exchange. IOSCO – International organization of Securities Exchange Commission. LTP – Last Trade Price. CP – Close Price
DSE General Indices: It’s continuing on all the listed companies in Dhaka
Stock Exchange.
DSE 20 Indices: DSE choose 2o shares of every month by the company’s financial performance, change of share price with good handover of that share volume.
3.6 What is DSE Trading?
Dhaka Stock Market Trading is the process of buying and selling of company stocks or shares. It
is also known as Equity Trading. A stock market is a market where securities like company stock
and derivatives of company stock are traded. These securities are listed on a Stock Exchange.
The stock market can be categorized into two parts
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I. The Primary Market: The primary market deals with offering of new issues (Initial
Public Offers or IPOs).
II. The Secondary Market: The secondary market deals with subsequent trading of the
shares after the IPO is made. There is no involvement of the issuing company. When
people talk about stock markets, they refer to the secondary market.
There is a wide range of investors in the stock market from small individual stock
investors to large hedge fund traders coming from different locations. They place their orders to
a professional in the stock exchange that is responsible for
executing the order.
Some exchanges are physical locations where the transactions are executed on a trading floor.
The method used in this kind of transactions is called open outcry. Only those stock exchanges
and commodity exchanges use this type of auction where traders can simultaneously place verbal
bids and offers.
Another type of exchange is there which a virtual kind of exchange is. This exchange is made up
of a computer network. In this type of exchanges, trading is done electronically through traders
at computer terminals.
3.6.1DSE Trading Day: Normal trading schedule of DSE is Sunday to Thursday except Government holidays.
3.6.2 DSE Trading Period: The trading period of DSE is now a day is 11am- 3pm.
3.6.3 DSE Trading Sessions: TESA conducts trading in-4-phases.
Enquiry: In this session Brokers can logon to the system. No order will be submitted in
this session. No trade will be executed. Only previous orders can be withdrew in this session
Opening: The Opening is a pure, single-price auction. All buy and all sell orders are
compared and calculate the open-adjust price. No trades will be executed in this session
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Continuous Trading: During this phase, participants enter orders and immediate
execution or for inclusion in the book. Automatic matching and execution takes place based on
best price/ first in, first out trading rules
Enquiry: Closing prices are calculated and disseminated to market participant. Market
will be closed in this session & other facilities like the previous enquiry session.
3.6.4 Qualifications for Trading
(1) A member shall qualify himself for trading if he -
(a) obtains a registration certificate from the Commission issued under regulation 5(4) of
the Securities and Exchange Commission (Stock-Dealer, Stock-Broker and Authorized
Representative) Regulations, 1994;
(b) becomes a member of the DSE Clearing House;
(c) is not otherwise barred by DSE or SEC under any law, rule or regulations for the time being
in force for trading.
(2) The DSE shall notify the name and other necessary particulars of a member whenever he
incurs a disqualification for trading or becomes otherwise ineligible for trading.
3.7 Types of Transactions:
Orders may be grouped or categorized based on the following, namely:-
(a) Price;
1(b) Volume; and
2(c) Validity.
Based on price, orders may be of the following categories, namely:
Limit order - Limit order must have a price limit which ensures that the order
shall be traded at the price equal to or better than the limit price.
Market order - Market order is the order to be executed at the touchline price. A
market order is matched immediately on arrival in to the trading engine at the touchline
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price. To avoid the possibility of the market order being matched at ridiculous rate, this is
protected by a price protection percentage as determined by the Council. If there is no
touchline price then the market order shall be rejected.
Based on volume, orders may be of the following categories, namely:-
Partial fill - A partial fill (PF) order signifies that as much possible of the order
quantity shall be executed as soon as the order is submitted to the trading engine. If the order is
not fully executed the remaining order quantity shall be stored which shall be visible to the
market.
Partial fill and kill - A partial fill and kill (PFAK) order signifies that as much as
possible of the order quantity shall be executed as soon as the order is submitted
and the remaining order quantity shall be returned to the trader who entered the
order.
Full fill or kill - A full-fill or kill (FOK) order signifies that either all of the orders
quantity shall be executed as soon as the order is submitted to the trading engine
or the entire order shall be rejected and returned to the trader.
Based on validity, orders may be of the following categories, namely:-
Good till day - By default, all orders shall be valid till the end of the current trading day.
Good till date - The trader can specify the date till which the order should remain active in the
market. The order validity date can be a date which is up to a maximum of thirty days from the
current trading date.
3.8 Order Withdrawals: The trader can withdraw his orders anytime before execution.
3.9 The Clearing and Settlement: The Clearing and Settlement module provides the
management of trade from the point of entry into the Settlement Pool trade database until it has
been delivered, settled and removed from the Settlement Pool. It consists of three major business
processes.
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Clearing: participant trade reporting, affirmation, billing and assigning settlement instructions.
Settlement: the process of overseeing that delivery of all instruments to the buyer and payment
of all moneys to the seller has occurred before removing the trade from the settlement pool.
Regulation 4 of the Settlement of Stock Exchange Transactions Regulation 1998 has been given
effect time to time. A new directive was made by SEC dated on 18th March 2003 "Adjusted due
position mechanism for settlement of scrip only as provided by regulation 4(1) of settlement of
Stock Exchange Transaction Regulations, 1998 shall remain suspended from 19th March 2003
until further order".
Here is a complete picture of the settlement system for all of our 427 Instruments in Five (5)
groups in the Four (4) markets.
A Group: Number of Instruments are 338 (150 + 8D + 22M + 158TB), Here D for Debentures,
M for Mutual funds & TB for Treasury Bonds (Trading in Public, Block & Odd-lot Market with
trade for trade settlement facility for scrip only through DSE Clearing House on T+1, T+3 basis).
"A" and "DA" are marked in BASES columns for Non-Demat & Demat instrument respectively
in our TESA Trading Software.
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The above cycle is valid for A, B, G & N category instruments traded in Public, Block & Odd-lot
market.
B Group: Number of Instruments are 44(Trading in Public, Block & Odd-lot Market with trade
for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "B" and "DB" are
marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA
Trading software.
G Group: Number of Instrument is 0 (Trading in Public, Block & Odd-lot Market with trade for
trade settlement facility through DSE Clearing House on T+1, T+3 basis). "G" and "DG" are
marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA
Trading software.
N Group: Number of Instrument is 11(Trading in Public, Block & Odd-lot Market with trade for
trade settlement facility through DSE Clearing House on T+1, T+3 basis). "N" and "DN" are
marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA
Trading software.
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Z Group: Number of Instruments are 34(Trading in Public, Block & Odd-lot Market with trade
for trade settlement facility through DSE Clearing House on T+1, T+9 basis). "Z" and "DZ" are
marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA
Trading software.
This cycle is valid only for Z group instruments traded in Public, Block & Odd-lot market.
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Instruments Of All Groups Traded In Spot Market:
The above cycle is valid for A, B, G, N & Z category instruments traded in spot market.
Instruments of Foreign Trades (DVP) Of All Groups:
The above cycle is valid for A, B, G, N & Z category instruments of foreign trade.
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Remarks:
* If any instrument declared as Compulsory Spot then Trades of Block and Odd-lot market of
that Instrument will be settled like Spot Market.
* Howla Charge, Laga Charge & Tax are always payable to DSE at Pay-In date for both
Buyer and Seller traded in Public, Block & Odd-lot Market.
* Howla Charge, Laga Charge & Tax are always payable to DSE at T+1 day for both Buyer
and Seller traded in Spot Market.
* Outside-Of-Netted settlement for "A" Group instrument has been withdrawn from 10th Dec
2006.
* DVP Trades are Off-Market Settlement (Broker to Broker).
3.10 Settlements for Different Categories Instruments:
01) For A group Instruments:
Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade * T+1 & T+3
Odd + Block Trade for Trade T+1 & T+3
Spot Trade for Trade T+0 & T+1
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02) For B group Instruments:
Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade * T+1 & T+3
Odd + Block Trade for Trade T+1 & T+3
Spot (Before Book-
closer)Trade for Trade T+0 & T+1
03) For G group Instruments:
Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade * T+1 & T+3
Odd + Block Trade for Trade T+1 & T+3
Spot (Before Book-
closer)Trade for Trade T+0 & T+1
04) For N group Instruments:
Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade * T+1 & T+3
Odd + Block Trade for Trade T+1 & T+3
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Spot (Before Book-
closer)Trade for Trade T+0 & T+1
* As netting system for shares has withdrawn, for A, B, G & N group instrument, member will
have to deposit the full shares at the DSE on T+1 after selling the shares, In case of purchasing
such shares, the buyer will have to deposit the Balanced (Netted) money traded in Public, Block
& Odd-lot market at the DSE on T+1.
05) For Z group Instruments:
Market name Trade for Trade System Settlement & Settlement Period
Public Trade for Trade * T+1 & T+9
Odd + Block Trade for Trade T+1 & T+9
Spot (Before Book-
closer)Trade for Trade T+0 & T+1
** Under the Trade for trade settlement system, member will have to deposit the full money at
the DSE on T+1 after purchasing the shares, In case of selling such shares, the seller will have to
deposit the full shares at the DSE on T+9.
DEMATE SHARE:
All selling shares have to transfer (Pay in) to the clearing account of selling Brokers from
concerned BO account within settlement period. Regarding the cash payment the procedure will
remain unchanged as mentioned above.
3.11 Settlements:
The settlement of all trading shall be made in accordance with the provisions of the rules
Or regulations made in this behalf by DSE for the time being in force
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3.11.1 General:
(1) A member shall be responsible for all orders entered from his trading workstation.
(2) Transaction fee(s) shall be charged and realized by DSE from the members concerned
upon execution of order(s) as specified by DSE.
(3) The Council may issue guidelines and clarifications from time to time for removal of
any difficulty in the execution or operation of these regulations under immediate
intimation to SEC.
(4) The terms and phrases used herein without a specific definition shall have the
meaning in accordance with the other relevant rules, regulations and current trade
practices in these behalf.
(5) Any determination made by the system through an interactive process shall be
conclusive
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Chapter 4
DSE Automated Trading System
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4.1 Preamble
Globally the developments in information & communication technologies (ICT) have created a
new instance in the securities market operations. Stock Exchanges all over the world have
realized the potentiality of ICT and inclined to the electronic trading systems. It was understood
by DSE that technology would ensure transparency, timeliness and satisfaction in customer
service. Considering those DSE introduced Automated Trading System on 10th August 1998.In
other words, the trading floor moved right into the member's office premises where an investor
started to place buy/sell orders.
Considering market growth the Automated Trading System was upgraded two times. The
recently Upgraded Trading System was started from 21st December, 2008.
4.2 Hardware
DSE Automated Trading System (HP Nonstop S7806) is running on fault tolerant, high
available, scalable and maintainable Mainframe Server. Previously DSE established the
TANDEM Nonstop K204 System on September 1998 and on August 2005 it was replaced with
highly scaleable HP Nonstop S7802.
DSE upgraded the Trading System again on 21st December, 2008. The existing HP Nonstop
S7806 Server is highly fault tolerant to the fact that no single component failure will halt the
system. Its constituent parts are hot swappable and upward compatible; components can be
added or removed while the system is running and any compatible new upgraded will work with
the system.
All disk drives are mirrored so, if any of the disk crashes the exact copy of the data is available at
online. Moreover the connecting path for every disk whether it is primary or mirror is also
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redundant. In every case, minimum two peripheral devices exist. All the components are working
active - active load balancing procedure. To ensure better power quality we have ensured high
end UPS's with long durable backup capability, two instant backup generations and other
electrical devices.
4.3 Network (LAN / WAN)
The entire Member (238 members) Server Applications (MSA) are connected with Nonstop HP
S-Series Server through either DSE LAN or WAN connectivity. Each member has one or more
Trader Work Station (TWS). The TWSs are being connected to the Trading Server via respective
MSA through LAN and WAN connection.
DSE outsourced Metro Net Ltd., DNS Ltd., X-Net Ltd., Dhaka Com Ltd., Ranks ITT, Link-3,
Royal Green Online Ltd. etc Network Service Providers (NSP under WAN Expansion Project).
Now a day’s member can establish a main office or branch offices to their remote location and
can trade smoothly by using different media ADSL, Optical fiber and Radio Link from Dhaka
and other important cities such as Gazipur, Narayanganj, Comilla, Hobiganj, Chittagong, Sylhet,
Khulna, Barisal, Rajshahi, Bogra at the same time.
Three DSE branch offices located at Chittagong, Sylhet and Khulna are connected via BTTB's
DDN link. We also used connectivity for redundancy for the DDN link. We have a plan to reach
the DSE branches in same way.
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DSE LAN/WAN Expansion within Dhaka City
DSE LAN/WAN Expansion outside of Dhaka City
In case of trade interruption due to serious hardware, software, network failure or
telecommunication disruption at the Brokerage houses, there is a provision to allow traders to
trade at DSE Contingency Trading floor.
4.3.1 System Software
The system software is HP Proprietary Nonstop KERNEL and includes the database as
part of the operating system thereby eliminating the layer typically found in most
Database Management Systems (DBMS). The Database functionalities are handled by
NONSTOP SQL, which is simply a different operational session for the operating
system. The proprietary nature of the system software arguably enhances system security.
Operating system is HP's proprietary Nonstop Kernel DBMS handled by Nonstop SQL.
The system software treats all its hardware resources as objects and is thus entirely
message driven. This then allows application software to be deployed using client / server
architecture providing shared data processing between the central server and the user
workstation. The central trading system resides in the Stock Exchange premises, which is
running 24 hrs in a day & 365 days in a year.
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4.3.2 Application Software
The application, which runs in DSE for trading, is called TESA (The Electronic Securities
Architecture). TESA has two parts: MSA (Member's Server Application) & TWS (Trader
workstation). MSA is the "Gateway" between the traders and the Stock Exchange, which
manages all the transactions and database operations between the traders and the Trading Engine.
TWS is the Front-end Application closer to investors, where they can submit Buy/Sell orders for
their desired securities
TESA (The Electronics Securities Architecture) is the Trading software (Based on HP
proprietary O/S & DBMS)
It has developed in view of Distributed Database system
In the client site it is being using SQL as local Database
Trading Software is MSA & TWS
In STSD (Signal trader Single Database) system both MSA & TWS are running on a Windows
2k Professional /XP Professional workstation and for MTSD (Multiple trader Single Database)
MSA install in a Windows 2k Server & the TWSs are in different Windows 2k Professional /XP
Professional workstation-using members in house LAN
A. TESA : TESA (The Electronics Securities Architecture) is the Trading software
(Based on HP proprietary O/S & DBMS)
B. TESA Architecture: TESA software is built for the global securities markets. It
uses fault tolerant computers, intelligent workstations and client / server design
techniques. This provides co-operative processing, high message integrity,
continuous operation and fully automatic recovery. This co-operative mechanism
enables very high speed processing which is essential for today's electronic
markets.
TESA's Application Programmatic Interface (API) is the gateway to the TESA
system from the outside world. All external devices connect through the API. The
API provides the translation between external devices and internal processes. This
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means that a new process does not need to be written to support each new device,
only the API needs to be modified.
C. Solution Benefits :
The TESA application suite derives significant advantages from being implemented on the HP
Nonstop platform. The HP Nonstop customers have benefited from these advantages.
Fault Tolerance: One of the most important automation requirements for any stock exchange
system is continuous system availability. With most systems Fault Tolerance is created at the
application level. Fault Tolerance is a fundamental design feature of the HP Nonstop
architecture.
Data Integrity: Data integrity is an integral feature of HP architecture. TESA employs standard
HP tools to achieve exceptional data integrity.
Scalability: The ability of an exchange to accommodate extraordinary increases in transaction
volumes without loss of its Capital investment in automation is very important. The HP Nonstop
Server is massively scalable due to Parallel processors.
D. TESA Functional Model :
An overview of the TESA Functional Model
Client / Server: TESA's Client / Server architecture enables an efficient allocation of computing
resources and provides easily modified user-friendly interfaces. TESA workstations operate
under Windows 2K/ XP professional and can function either as servers on a broker's network or
as workstation. These are used to perform trading and settlement activity by the brokers.
E. Principle Function of TESA
Market Information: Supplying all market information needed to formulate the buy and sell
decisions.
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Order Management: Accept, validate and store orders and quotes from broker workstations and
/ or systems.
Order Execution: Automatically executes orders when buy and sell prices match.
Trade Reporting: Trade execution reports are provided to each trade participant, to the
settlement system and / or the depository and to the market.
Index Calculation: Calculates and publishes market indices (DSE General Index & Weighted
Average Index.)
Market Access: Provide exchange members with efficient affordable GUI-based tools for
accessing the market.
F. Markets
Four types of market at DSE
Public Market: In this market instruments are traded in normal volume
Spot Market: Instruments are traded in normal volumes under corporate action if any
Odd lot Market: Odd lots of all Instruments are trade in this market
Block Market: Instruments are traded in bulk volume
G. Market Control :
The Market Control Workstation allows the exchange administrative staff to control the
operation of the market, e.g.
Session Control: Opening and closing the market via interactive control or by preset timers.
Validation Parameters: Setting and viewing parameters that control the trading engine
validation e.g. tick size, Circuit Breaker, Circuit Filter, Market lot, Price protection Percentage.
Messaging: Allows the dissemination of company announcement data and general market
administrative massages.
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H. Market Information: Market Information is a real-time market data system. It
collects, manages, generates and stores information relating to trade instruments
and issuing companies. Market Information is responsible for,
Collecting Real-Time Market Information: Bids, offers, last sale (i.e. most recent trade price
and volume), book and other data are gathered via the Trading engine. It supports TESA's
automated and manual trading modules and can process the trades of external and off-market
systems.
Collecting company Information: All information supplied by the listed companies are
maintained in the TESA database.
Generating Market Statistics: TESA generates market indices on a real time basis. It generates
other statistical information such as Price.
I. Broker Support :
Research and Enquiry: this module provides brokers access to the local Broker Support and
TESA databases for enquiries and research purposes.
Public Order Book
Broker Order Book
The multi-windows environment allows users to simultaneously view orders, market and trades.
Broker Support offers Stock Exchange members two configurations; standalone and multi-user.
Both configurations maintain a database consisting of information generated by the TESA Server
and the local system.
4.4 Surveillance
The main objective of the Surveillance function of the Exchange is to promote market integrity
in two ways -
By monitoring price and volume movements (volatility) as well as by detecting potential
market abuses at a nascent stage, with a view to minimizing the ability of the market
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participants to influence the price of the scrip/scrip’s in the absence of any meaningful
information.
By managing default risk by taking necessary actions timely.
Market Abuse is a broad term which includes abnormal price/volume movement, artificial
transactions, false or misleading impressions, insider trading, etc. In order to detect aberrant
behavior/ movement, it is necessary to know the normal market behavior -
The department carries out investigation, if necessary, based on the preliminary
examination/analysis and suitable actions are taken against members involved based on the
investigation.
All the instruments traded in the market come under the Surveillance umbrella of DSE.
Surveillance activities at the Exchange are divided broadly into two major segments -
Price Monitoring: Price monitoring is manly related to the price movement/ abnormal
fluctuation in prices or volumes etc.
Position Monitoring: The position monitoring relates mainly to abnormal positions of
members, etc. in order to manage default risk.
Price Monitoring :
The functioning of the Price Monitoring is broadly divided into following activities -
On line Surveillance
One of the most important tools of the Surveillance is the On-line Real Time Surveillance system
with main objectives of detecting potential market abuses at a nascent stage to reduce the ability
of the market participants to unduly influence the price and volumes of the scrips traded at the
Exchange, improve the risk management system and strengthen the self regulatory mechanism at
the Exchange. The system provides facility to access trades and orders of members.
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Off-Line Surveillance
The Off-Line Surveillance system comprises of the various reports based on different parameters
and scrutiny thereof -
High/ Low Difference in prices
% change in prices over a week/ fortnight/ month
Top N scrip’s by Turnover over a week/ fortnight/ month
Top N scrip’s by Volume over a week/ fortnight/ month
Trading in infrequently traded scrip’s
Scrip’s hitting New High / Low etc.
The Surveillance actions or investigations are initiated in the scrip’s identified from the above-
stated reports.
Investigations
Conducting in-depth investigations based on preliminary enquiries/analysis made into trading of
the scrip. In case of irregularities observed, necessary actions are initiated or investigation case
forwarded to SEC, if necessary through the CEO.
Surveillance Actions
Warning to Members
The department may issue verbal/ written warning to member/s when market
irregularities in the scrip are suspected.
Imposition of penalty/ suspension
The department, through the CEO, imposes penalty or suspend the member/s who are
involved in market irregularities, based on the input/ evidence available from
investigation report.
Rumor verification
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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 and on-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 the quality of exposure.
The following key areas are examined to assess the market risk involved -
Online monitoring of Brokers 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. It is for keeping a watch on the exposure of the
members & ascertains the quality of exposures. A detailed report on the net outstanding positions
of top purchasers and top sellers in individual scrip’s, is prepared, if considered necessary.
Concentrated B/S
It is considered a risky issue. In case, such a situation is noticed, fundamentals of the scrip’s,
their daily turnover, and their nature of transactions are ascertained. Thereafter, based on the
market risk perception appropriate surveillance actions are taken.
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B/S of scrip’s having thin trading
It is closely scrutinized as comparatively high market risk is involved in trading in such scrip’s.
Details of trades in such scrip’s, if necessary, are called from members to assess the market risk
involved & decide on the appropriate surveillance action.
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 Dealers own trades
Trades executed by the trading members (Dealers) are verified to ascertain the genuineness of
trades.
Verification of Sponsor's Trade
The Sponsors trades executed by the trading members are verified to ascertain the genuineness of
trades.
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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 of 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. This enables the Exchange to avert market problems before it causes a
serious damage.
Review Block Trades
To determine -
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.
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 -
broker/s with frequent failures
A particular stock with a pattern.
Verify Company Accounts
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To scrutinize company announcements, company reports, auditors qualifications & other notes
of special interests in the published accounts of such company.
Review Media Information
To scrutinize press articles or 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 1 / 2 weeks to identify any abnormal
deal.
Develop Good Liaison
To develop & maintain good liaison with staff members of SEC & listed companies & member
firms as well.
Develop market contacts & to pick up Intelligence.
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Chapter 5
Rules and Regulations of DSE
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5.1 Corporate Governance Guidelines
SECURITIES AND EXCHANGE COMMISSION
Jiban Bima Tower 10, Dilkusha (15th, 16th and 20th Floor)
Dhaka-1000
NOTIFICATION
Dated the 20th February, 2006
No. SEC/CMRRCD/2006-158/Admin/02-08: Whereas, the Securities and Exchange
Commission (herein after referred to as the "Commission') deems it fit that the consent already
accorded by the Commission, or deemed to have been accorded by it, or to be accorded by it in
future, to the issue of capital by the companies listed with any stock exchange in Bangladesh,
should be subject to certain further conditions, on 'comply or explain' basis, in order to enhance
corporate governance in the interest of investors and the capital market;
Now, therefore, in exercise of the power conferred by section 2CC of the Securities and
Exchange Ordinance, 1969 (XVII of 1969), the Commission hereby supersedes its earlier Order
No. SEC/CMRRCD/2006-158/Admin/02-06 dated the 9th January, 2006 and imposes the
following further conditions to the consent already accorded by it, or deemed to have been
accorded by it or to be accorded by it in future, to the issue of capital by the companies listed
with any stock exchange in Bangladesh:
Provided, however, that these conditions are imposed on 'comply or explain’ basis. The
companies listed with any stock exchange in Bangladesh should comply with these conditions or
shall explain the reasons for non-compliance in accordance with the condition No.5.
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The Conditions:
1.00 BOARD OF DIRECTORS:
1.1. Board's Size
The number of the board members of the company should not be less than 5
(five) and more than 20 (twenty):
Provided, however, that in the case of banks and non-bank financial institutions,
insurance companies and statutory bodies for which separate primary regulators
like Bangladesh Bank, Department of Insurance etc. exist, the Board of those
companies should be constituted as may be prescribed by such primary
regulators in so far as those prescriptions are not inconsistent with the aforesaid
condition.
1.2. Independent Directors
All companies should encourage effective representation of independent
directors on their Board of Directors so that the Board, as a group, includes core
competencies considered relevant in the context of each company. For this
purpose, the companies should comply with the following:-
(i) At least one tenth (1/10) of the total number of the company's board of
directors, subject to a minimum of one, should be independent directors.
Explanation: For the purpose of this clause "independent director" means a
director who does not hold any share in the company or who holds less than one
percent (1%) shares of the total paid-up shares of the company, who is not
connected with the company's promoters or directors or shareholder who holds
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one percent (1%) or more than one percent (1%) shares of the total paid-up
shares of the company on the basis of family relationship; who does not have
any other relationship, whether pecuniary or otherwise, with the company or its
subsidiary/associated companies, who is not a member, director or officer of any
stock exchange, and who is not a shareholder, director or officer of any member
of stock exchange or an intermediary of the capital market.
(ii) The independent director(s) should be appointed by the elected directors.
1.3. Chairman of the Board and Chief Executive
The positions of the Chairman of the Board and the Chief Executive Officer of
the companies should preferably be filled by different individuals. The
Chairman of the company should be elected from among the directors of the
company. The Board of Directors should clearly define respective roles and
responsibilities of the Chairman and the Chief Executive Officer.
1.4. The Director's Report to Shareholders
2.00CHIEF FINANCIAL OFFICER (CFO), HEAD OF INTERNAL AUDIT,
AND COMPANY SECRETARY
2.1 Appointment
The company should appoint a Chief Financial Officer (CFO), a Head of
Internal Audit and a Company Secretary. The Board of Directors should clearly
define respective roles, responsibilities and duties of the CFO, the Head of
Internal Audit and the Company Secretary.
2.2 Requirement to Attend Board Meetings
The CFO and the Company Secretary of the companies should attend meetings
of the Board of Directors, provided that the CFO and/or the Company Secretary
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should not attend such part of a meeting of the Board of Directors which
involves consideration of an agenda item relating to the CFO and/or the
Company Secretary.
3.00 AUDIT COMMITTEE:
The company should have an Audit Committee as a sub-committee of the Board
of Directors.
The Audit Committee should assist the Board of Directors in ensuring that the
financial statements reflect true and fair view of the state of affairs of the
company and in ensuring a good monitoring system within the business.
The Audit Committee shall be responsible to the Board of Directors. The duties
of the Audit Committee should be clearly set forth in writing.
3.1 Constitution of Audit Committee
(i) The Audit Committee should be composed of at least 3 (three) members.
(ii) The Board of Directors should appoint members of the Audit Committee
who should be directors of the company and should include at least one
independent director.
(iii) When the term of service of the Committee members expires or there is
any circumstance causing any Committee member to be unable to hold office
until expiration of the term of service, thus making the number of the
Committee members to be lower than the prescribed number of 3 (three)
persons, the Board of Directors should appoint the new Committee member(s)
to fill up the vacancy(ies) immediately or not later than 1 (one) month from the
date of vacancy(ies) in the Committee to ensure continuity of the performance
of work of the Audit Committee.
3.2 Chairman of the Audit Committee
(i) The Board of Directors should select 1 (one) member of the Audit Committee
52 | P a g e
to be Chairman of the Audit Committee.
(ii) The Chairman of the audit committee should have a professional
qualification or knowledge, understanding and experience in accounting or
finance.
3.3 Reporting of the Audit Committee
3.3.1Reporting to the Board of Directors
(i) The Audit Committee should report on its activities to the Board of Directors.
(ii) The Audit Committee should immediately report to the Board of Directors
on the following findings, if any:-
(a) Report on conflicts of interests;
(b) Suspected or presumed fraud or irregularity or material defect in the
internal control system;
(c) Suspected infringement of laws, including securities related laws, rules
and regulations; and
(d) Any other matter which should be disclosed to the Board of Directors
immediately.
3.3.2Reporting to the Authorities
If the Audit Committee has reported to the Board of Directors about anything
which has material impact on the financial condition and results of operation and
has discussed with the Board of Directors and the management that any
rectification is necessary and if the Audit Committee finds that such rectification
has been unreasonably ignored, the Audit Committee should report such finding
to the Commission, upon reporting of such matters to the Board of Directors for
three times or completion of a period of 9 (nine) months from the date of first
reporting to the Board of Directors, whichever is earlier.
53 | P a g e
3.4 Reporting to the Shareholders and General Investors
Report on activities carried out by the Audit Committee, including any report
made to the Board of Directors under condition 3.3.1 (ii) above during the year,
should be signed by the Chairman of the Audit Committee and disclosed in the
annual report of the issuer company.
4.00 EXTERNAL / STATUTORY AUDITORS
The issuer company should not engage its external/statutory auditors to perform
the following services of the company; namely:-
(i) Appraisal or valuation services or fairness opinions;
(ii) Financial information systems design and implementation;
(iii) Book-keeping or other services related to the accounting records or financial
statements;
(iv) Broker-dealer services;
(v) Actuarial services;
(vi) Internal audit services; and
(vii) Any other service that the Audit Committee determines.
5.00 REPORTING THE COMPLI ANCE IN THE DIRECTOR'S REPORT
The directors of the company shall state, in accordance with the annexure
attached, in the directors' report whether the company has complied with these
conditions.
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5.2 Market at a Glance
Years 2006 2007 2008 2009
Listed Issues
No. of Securities 310 350 412 443
% of Annual Growth 8.39 12.9 17.71 7.52
No. of Securities in mn 1546.05 2081.00 2759.00 3136.00
% of Annual Growth 24.27 21.83 32.58 13.66
Issued Capital & Debentures
Tk. mn 118437 214472 372156 457944
US$ mn 1711.52 3127.33 5409.24 6634.95
% of Annual Growth 68.44 81.09 73.52 23.05
Market Capitalization
-Tk. mn 323367.94 742195.87 1059530 1312773
US$ mn 4672.95 10822.34 15400 19020.18
% of Annual Growth 38.74 135.28 42.76 23.90
Conversion Rate 69.2 68.58 68.80 69.02
Turnover of Listed Securities
Total Turnover
Volume in mn 797.77 2831.23 4605.38 3480.54
Value (Tk. mn) 65079.11 322867.07 667964.82 565038.22
Value (US$ mn) 1099.3 4707.89 9708.79 8186.59
% of Annual Growth 0.38 396.11 106.89 -15.41
Daily Average Transaction
Volume in mn 3.5 11.95 19.43 27.84
Value (Tk. mn) 285.43 1362.31 2818.42 4520.31
Value (, US$ mn). 4.82 19.86 40.97 65.49
% of Annual Growth 13.58 377.28 106.89 60.38
Initial Public Offering(IPO)
NO. of Public Issues 7 14 12 4
Size of Public Offer
Tk. mn 1433.95 4638.13 3043.41 337.00
US$ mn 24.22 67.63 44.24 4.88
% of Annual Growth - 13.29 223.45 34.38 88.93
Size of Pre IPO Placement
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Tk. mn 146.72 1540.00 800.00 60.00
-US$ mn 2.47 22.46 11.63 0.87
% of Annual Growth - 0.56 949.62 48.05 -92.50
Public Subscription
Tk. mn 15241.93 37937.06 37821.71 15477
US$ mn 257.46 553.18 549.73 224.24
% of Annual Growth --59.08 < (3.50) 148.90 0.30 59.08
** Up to June 2009
5.3 Investor Guide:
A. Procedure for Making Portfolio Investment by Foreign Investors
Foreigner investors and the Non Resident Bangladeshis (NRBs) can make investment into
our securities market from any corner of the world. To exercise the investment as
NRBs/foreigners, one must enter into an agreement with a brokerage house of their choice
along with anyone of the following institutions:
Authorized Dealer of Foreign Exchange
Custodian Bank
Merchant Bank (Portfolio Manager)
All NRBs/foreigners for the purpose of making investment in our market have to have a
Beneficiary Owners (BO) account and a client account opened with any of the brokerage house
as well as entering into agreement with the Authorized Dealer or Custodian Bank or Portfolio
Manager and thus maintain the investment activities from abroad. List of Brokers together with
regular market scenario, fundamental status of the companies listed on the Exchanges and many
other relevant necessary information would be available at the website of DSE (www.dsebd.org).
List of Brokers of the Exchanges, Merchant Bankers or Custodian Banks would be available at
the web page of SEC
B. Opportunity for Foreign Investors :
56 | P a g e
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 capital machinery 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.
C. Facilities for Non-Residency Bangladeshis :
Non-resident Bangladesh investors enjoy facilities similar to foreign investors
· Allowed to buy newly issued shares/debentures of Bangladeshi companies
· 10 percent reserved quota for non-resident Bangladeshis in primary shares (IPO)
57 | P a g e
· Foreign currency deposits in the Non-resident Foreign Currency (NFCD) account
D. Facilities and Incentives
Tax holiday 5-10 years depending on location of Industries.
15 years tax holiday for private power generation companies.
· Facilities for repatriation of invested capital, profit & dividend.
· Exemption of tax on interest on foreign loan.
· Tax exemption on royalties, technical know- how & technical assistance
fees.
· Avoidance of double taxation on the basis of bilateral agreements.
· Six month multiple
September, 201
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1. Main Board as on September 2010
Main Board as on September 2010 Total Number of Listed Securities 463Total Number of Companies 246
Total Number of Mutual Funds 28
Total Number of Debentures 8
Total Number of Treasury Bonds 179
Total Number of Corporate Bonds 2
Total number of Shares/Certificates: (No. in mn)
Total Number of Shares & Mutual Fund Certificates of All Listed Securities*
11,283
Total Number of Shares of All Listed Companies 9,698
Total Number of Certificates of All Listed Mutual Funds 1,575
(No. in ' 000)
Total Number of All Listed Debentures 409
Total Number of All Listed Gov. T-Bonds 4,034
Total Number of All Listed Corporate Bonds 4,336
Total Issued Capital of : (Figure Tk.in mn)
(Figure US$ in mn)
All Listed Securities 627,022 8,998.59
All Companies Shares 202,167 2,901
All Mutual Funds 16,066 231
All Debentures 140 2
All Listed Govt. T-Bonds 404,313 5,802
All Listed Corporate Bonds 4,336 62
Total Market Capitalization of: (Figure Tk.in mn)
(Figure US$ in mn)
All Listed Securities 3,020,194 43,344
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All Listed Companies Shares 2,578,559 37,006
All Listed Mutual Funds 32,931 473
All Debentures 576 8
All Listed Govt. T-Bonds 404,313 5,802
All Listed Corporate Bonds 3,815 55
Conversion Rate: BDT against USD 69.68
* Total No. of Shares/Share Capital / Market Capital includes Bonus /Right of shares.
2. Sectoral Performance - September 2010
DSE Sectoral Performance - September 2010Sector Market Capitalization in
mn% oftotalMkt Cap
Turnover Tk. in mn % oftotal
Turnover
September August September
August
Financial Sector Banks 661,151.86 622,510.62 25.17 56,351.91 54,774.34 18.03Financial Institutions
315,119.61 324,051.18 12.00 56,490.42 69,496.61 18.07
Insurance 139,350.38 128,542.88 5.31 24,614.09 41,088.60 7.87Mutual Funds 32,931.22 32,091.47 1.25 7,201.90 8,009.18 2.30Total 1,148,553.0
71,107,196.1
543.73 144,658.3
2173,368.7
446.28
Manufacturing Foods 56,707.35 53,896.24 2.16 5,474.24 8,037.64 1.75Pharmaceuticals 211,990.99 185,797.73 8.07 18,630.78 22,176.23 5.96Textile 111,342.72 112,465.94 4.24 29,876.64 35,568.31 9.56Engineering 135,475.29 123,064.52 5.16 34,808.45 42,871.95 11.14Ceramics 58,333.44 59,304.98 2.22 3,614.22 6,406.94 1.16Tannery 17,205.45 16,233.87 0.66 2,606.72 4,252.59 0.83Paper & Printing 1,377.52 1,301.52 0.05 51.89 43.31 0.02Jute 813.07 807.59 0.03 43.46 15.11 0.01Cement 84,031.82 71,462.46 3.20 16,736.14 11,716.56 5.35Total 677,277.66 624,334.85 25.78 111,842.5
3131,088.6
335.78
Service & Miscellaneous Fuel & Power 329,527.36 317,918.32 12.55 26,501.97 43,272.91 8.48Service & Real Estate
38,865.98 38,636.23 1.48 6,767.92 13,537.80 2.17
IT 4,745.87 5,396.85 0.18 1,862.21 2,051.25 0.60Telecommunication
323,261.83 345,001.66 12.31 1,675.00 3,162.69 0.54
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Travel and Leisure
11,381.59 9,416.59 0.43 4,702.81 5,087.85 1.50
Miscellaneous 89,258.35 92,629.95 3.40 14,509.61 22,806.47 4.64Total 797,040.97 808,999.60 30.34 56,019.52 89,918.96 17.92Bond Corporate Bond 3,815.50 3,778.18 0.15 41.98 61.74 0.01Total 3,815.50 3,778.18 0.15 41.98 61.74 0.01 Grand Total 2,626,687.2
12,544,308.7
7100 312,562.3
5394,438.0
7100
3. Performance of DS 20 - September 2010
Performance of DS 20 - September 2010
Sl. No.
Company Mcap
Tk mn
% of
Mcap
Turnover
Tk mn
% of
Turnover
1 Islami Bank 42,143.59 1.60 904.86 0.29
2 NBL 36,797.18 1.40 3,139.33 1.00
3 Prime Bank 26,617.50 1.01 610.57 0.20
4 Southeast Bank 17,234.69 0.66 1,889.76 0.60
5 Dhaka Bank 16,090.57 0.61 2,944.09 0.94
6 Uttara Finance 17,974.44 0.68 3,965.28 1.27
7 Bangladesh Lamps 2,009.82 0.08 96.19 0.03
8 Singer Bangladesh 15,881.49 0.60 1,826.96 0.58
9 BATBC 41,844.00 1.59 1,803.15 0.58
10 AMCL (Pran) 1,506.00 0.06 90.20 0.03
11 BOC Bangladesh 12,048.31 0.46 1,381.33 0.44
12 Square Textile 18,028.23 0.69 5,188.72 1.66
13 Beximco Pharma 31,366.07 1.19 3,099.72 0.99
14 ACI Limited. 7,610.25 0.29 243.17 0.08
15 Square Pharma 68,371.51 2.60 5,741.39 1.84
16 Meghna Cement 9,447.92 0.36 5,670.40 1.81
17 Apex Tannery 2,694.81 0.10 905.06 0.29
18 Bata Shoe 10,142.35 0.39 901.85 0.29
19 Monno Ceramic 1,086.75 0.04 41.00 0.01
20 GQ Ball Pen 1,170.82 0.04 506.59 0.16
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4. Top 20 Companies by Market Cap- September 2010
Top 20 Companies by Market Cap - September 2010Sl. No
Name Category Mkt. Cap.
Tk. Mn
% of total Mkt. Cap.
1 GrameenPhone Ltd. DA 323,261.83 11.852 Titas Gas Trans. & Dist. Co. Ltd. DA 93,697.72 3.433 ICB DA 79,675.00 2.924 Square Pharma DA 68,371.51 2.515 BEXIMCO DA 52,159.16 1.916 Dhaka Electric Supply Company DA 48,695.82 1.787 Prime Finance & Invest. DA 42,291.22 1.558 Islami Bank DA 42,143.59 1.549 BATBC DA 41,844.00 1.5310 Lafarge Surma Cement DZ 41,722.34 1.5311 BSRM Steels Limited DA 40,999.66 1.5012 Summit Power Ltd. DA 39,836.25 1.4613 BEXTEX Limited DA 39,134.94 1.4314 Power Grid Company of Bangladesh Ltd. DA 39,068.30 1.4315 AB Bank DA 38,832.41 1.4216 UCBL DA 37,000.06 1.3617 NBL DA 36,797.18 1.3518 Pubali Bank DA 36,432.26 1.3419 Dutch-Bangla Bank DA 36,280.00 1.3320 Export Import (Exim) Bank DA 33,432.57 1.23
5. Monthly Performance for one year (DSE Performance - September 2010)
DSE Performance: October 2009 to September 2010Month
DSE Turnover Ratio ofTurnover to
Market Cap.
IndexValue
Tk. in mn
Volume
Nos. mn
DSI DGEN DSE 20
Oct-09 210,506.03 1,171.27 0.14 2,816.26 3,364.26 2,253.23
Nov-09 179,817.56 657.11 0.10 3,632.40 4,380.95 2,513.53
Dec-09 179,263.26 591.42 0.09 3,747.53 4,535.53 2,613.49
Jan-10 262,869.41 1,020.70 0.12 4,422.81 5,367.11 3,030.19
Feb-10 249,982.12 953.64 0.12 4,549.60 5,560.56 2,992.93
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Mar-10 175,115.99 747.99 0.08 4,573.81 5,582.33 2,952.01
Apr-10 191,303.18 700.63 0.08 4,641.54 5,654.88 3,039.17
May-10 386,238.36 1,013.99 0.08 5,030.05 6,107.81 3,432.23
Jun-10 387,733.65 1,203.94 0.14 5,111.63 6,153.68 3,650.04
Jul-10 322,769.28 1,163.22 0.11 5,278.89 6,342.76 3,721.78
Aug-10 394,438.07 1,793.43 0.13 5,555.49 6,657.97 3,874.50
Sep-10 312,562.35 1,602.83 0.10 5,930.90 7,097.38 4,137.93
6. Top 20 Companies by EPS - September 2010
Top 20 Companies by EPS - September 2010
Sl
No.
Company Name Category Face
Value
EPS
Actual Tk
EPS
%
PE Dividend (%)
As per last AGM 1 Reckitt Benckiser(Bd.)Ltd. DA 10 41.90 418.99 29.53 750%
2 BOC Bangladesh DA 10 40.07 400.72 19.76 177%
3 1st ICB M.F. DA 100 385.24 385.24 21.87 310%
4 Renata Ltd. DA 100 365.21 365.21 30.15 60%, 25%B
5 BATBC DA 10 34.48 344.76 20.23 300%
6 Bata Shoe DA 10 32.85 328.51 22.57 220%
7 ACI Limited. DA 10 30.64 306.37 12.8 105%
8 Glaxo SmithKline DA 10 26.88 268.78 53.53 160%
9 Berger Paints DA 10 25.00 249.98 38.74 150%
10 BEXIMCO DA 10 21.62 216.20 14.58 60%B
11 Pharma Aids DA 100 210.27 210.27 18.42 30%
12 Apex Adelchi Footwear Ltd. DA 100 188.03 188.03 17.47 35%
13 Atlas Bangladesh DA 10 16.79 167.92 31.65 75%, 33.33%B
14 Marico Bangladesh Ltd. DA 10 16.45 164.50 41.87 25%
15 National Tea DA 100 156.78 156.78 28.06 20%
16 Padma Oil Co. DA 10 15.36 153.56 64.98 50%, 200%B
17 Heidelberg Cement Bd. DA 100 150.59 150.59 25.52 38%
18 LankaBangla Finance Ltd. DA 10 14.00 140.05 36.49 15%, 20%B
19 Aramit DA 10 13.80 137.98 42.77 15%, 50%B
20 IDLC Finance Limited DA 100 136.98 136.98 33.92 10%, 100%B
7. Sectoral P/E - September 2010
Sectoral P/E - September 2010
Sector
Sectoral Price Earnings RatioSep-10 Aug-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04
Bank 16.50 15.72 18.17 16.62 24.97 15.49 17.90 21.74Financial Institutions 47.04 48.38 Mutual Funds 17.52 25.08 29.06 20.37 20.29 6.13 6.55 8.27Engineering 66.98 60.95 36.50 30.24 28.57 17.34 14.14 18.62Food & Allied 23.37 22.22 17.29 16.93 23.28 18.69 9.13 10.11Fuel & Power 28.00 27.02 17.71 15.83 35.95 18.87 22.32 14.79Jute 53.39 53.28 27.23 12.15 7.98 6.74 12.55 19.56Textile 55.89 57.49 32.93 13.85 12.14 12.01 10.08 15.30Pharmaceuticals 36.29 34.38 27.64 30.96 21.05 11.76 10.84 18.19Paper & Printing 35.21 33.27 27.59 9.36 6.23 6.62 4.69 1.82Service & Real estate 67.29 66.89 45.65 22.66 8.82 12.62 8.16 9.61Cement 38.11 32.50 56.90 10.26 12.61 18.53 16.13 25.23IT 68.31 77.68 60.71 46.52 15.25 11.12 10.46 25.11Tannery 20.98 19.66 15.39 16.43 15.38 8.00 10.28 10.51
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Ceramic 118.66 120.65 39.97 47.80 29.85 14.88 17.06 25.74Insurance 47.87 43.60 31.39 21.81 15.59 10.24 20.87 26.92Telecommunication 19.82 21.15 84.85 Travel and Leisure 87.05 72.02 Miscellaneous 20.20 20.95 28.85 34.43 14.43 11.05 7.83 13.21Market P/E 26.29 25.81 25.65 18.42 23.58 14.51 13.85 18.40
8. Daily Market Data - September 2010
Market Data during September 2010Date
DGEN
Change DSI
DSE 20
Securities
Traded
No. of
Trades
Volume of
Transactio(Nos. in lakh)
Turnover
(Tk in mn)
Mkt Cap
(Tk in mn)
Inpoint
s
In%
02/09/10
6,774.87
116.90
1.76 5,669.86
3,913.62
253 204,517
850 15,217.66
3,035,273.16
05/09/10
6,889.88
115.01
1.70 5,782.42
3,961.27
252 205,694
736 16,228.35
3,073,963.39
06/09/10
6,803.69
(86.19)
(1.25)
5,705.88
3,934.71
256 206,142
821 15,061.72
3,039,707.51
08/09/10
6,807.24
3.56 0.05 5,714.24
3,954.34
257 215,406
936 16,046.66
3,037,551.71
13/09/10
6,796.48
(10.76)
(0.16)
5,701.61
3,977.62
250 147,463
536 10,283.62
3,031,029.34
14/09/10
6,805.71
9.24 0.14 5,705.15
3,981.55
257 153,090
524 11,315.59
3,035,846.35
15/09/10
6,792.84
(12.87)
(0.19)
5,691.99
3,975.97
253 170,384
689 13,371.85
3,026,479.35
16/09/10
6,797.47
4.63 0.07 5,692.91
3,958.67
251 177,003
734 13,409.99
3,023,236.88
19/09/10
6,844.98
47.51 0.70 5,728.27
3,971.23
257 228,554
970 18,166.06
3,034,709.08
20/09/10
6,897.56
52.59 0.77 5,775.11
4,045.75
262 255,349
1091 19,009.55
3,058,199.94
21/09/10
6,947.14
49.57 0.72 5,817.58
4,137.24
260 269,021
1078 20,795.13
3,076,557.44
22/09/10
6,882.12
(65.02)
(0.94)
5,769.33
4,122.57
258 252,681
1047 17,776.45
3,057,498.88
23/09/10
6,904.08
21.96 0.32 5,787.03
4,096.84
259 218,419
900 15,806.26
3,062,236.71
26/09/10
6,958.69
54.61 0.79 5,832.90
4,123.50
260 245,067
968 19,111.91
3,076,161.36
27/09/10
7,026.27
67.58 0.97 5,885.79
4,137.13
253 283,962
1048 22,569.77
3,094,347.80
28/09/10
7,042.37
16.10 0.23 5,892.46
4,127.35
251 287,837
1062 24,719.49
3,099,442.90
29/09/10
7,088.54
46.17 0.66 5,927.16
4,145.33
254 264,524
1016 20,173.34
3,108,673.32
30/09/10
7,097.38
8.84 0.12 5,930.90
4,137.93
252 284,649
1022 23,498.97
3,113,233.18
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Chapter 6Trend of Market performance and Growth
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6.1 Trend of Market Performance:
Liquidity Analysts generally use the term "liquidity" to refer to the ability to easily buy and sell securities. A comprehensive measure of liquidity would include all the costs associated with trading, including the time costs and uncertainty of finding a counterpart and settling the trade. As the direct measure of liquidity is beset with complexity, analysts typically use proxy measures of liquidity.
Total value traded/GDP equals total value of shares traded on the stock market divided by GDP. The total value traded ratio measures the organized trading of equities as a share of national output .The total value traded/GDP ratio complements the market capitalization ratio. Together, market capitalization and total value traded/GDP inform us about market size and liquidity. Table 3 shows the liquidity situation of Bangladesh stock market in terms of total value traded to GDP ratio. The ratio has increased form an insignificant number (0.000228) in 1990-91 to 4.05 % in 2006-07. Mean value of 0.015 with a standard deviation of 0.011 for the ratio imply that the increase is not even smooth; there is a marked fluctuation in the value traded to GDP ratio over the years.
Turnover equals the value of total shares traded divided by market capitalization. High turnover is often used as an indicator of high level of liquidity. Turnover also complements total value traded ratio. While total value traded /GDP captures trading compared with the size of the economy, turnover measures trading relative to the size of the stock market. Put it differently, a small, liquid market will have a high turnover ratio but a small total value traded/GDP ratio.
Below table depicts the turnover ratio of the stock market of Bangladesh.. During the study period it increased form 1.1% to 17.5%. The turnover ratio peaked at 62.1% during the year 1998-99 showing a declining trend afterwards. Minimum and maximum ratio of 0.012 and 0.621 during the study period with a mean ratio of 0.215 and standard deviation of 0.192 indicate marked fluctuations in the turnover ratio. The linear trend line (figure C) of turnover ratio shows an upward trend though the R2 of 0.093 indicates a poor model fit.
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Liquidity measure- total value traded to GDP
Year GDP(billion Taka)
Total value traded(billion Taka)
Value traded /GDP
Year GDP(billion Taka)
Total value traded(billion Taka)
Value traded /GDP
1990-91 834.39 0.19 0.000 1999-00 2370.85 53.2986 0.022
1991-92 906.5 0.12 0.000 2000-01 2535.46 54.6645 0.022
1992-93 948.07 0.44 0.001 2001-02 2732.01 48.571 0.018
1993-94 1030.36 0.58 0.001 2002-03 3005.8 25.8407 0.009
1994-95 1589.76 6.3997 0.004 2003-04 3329.73 70.7324 0.021
1995-96 1663.24 36.222 0.022 2004-05 3707.07 78.8775 0.021
1996-97 1807.07 25.9485 0.014
2005-06 4157.28 57.4001 0.014
1997-98 2001.76 48.4044 0.024
2006-07 4674.97 189.7104 0.041
1998-99 2196.95 50.5023 0.023
Descriptive statistics
Mean Standard
deviation
Kurtosis
Skewness Minimum Maximum
Value traded to GDP ratio
0.015 0.011 0.024 0.264 0.000 0.041
Turnover ratio 0.215 0.192 -0.384 0.923 0.012 0.621
Source: Computed from data of various issues of Bangladesh statistical year book, SEC quarterly review and DSE monthly review
6.2 Indicators of Stock Market Growth
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Literatures provide no unique measure of indicators of stock market development. However it is evident from the literatures (see for instance, Naceuret et. al. 2007; Yartey, 2005; Demirguc-Kunt, and Ross. Levine, 1996; ) that the broadly used indicators of stock market growth are market size in terms of market capitalization, liquidity of the market, market concentration, degree of listing, volatility in the market, foreign portfolio investment and integration of the market. In this study we examine all these indicators (excepting integration variable) to evaluate the growth pattern of Bangladesh stock market.
Stock market size: Market capitalization ratio equals the value of listed shares divided by GDP. Analysts frequently use the ratio as a measure of stock market size. In terms of economic significance, the assumption behind market capitalization is that market size is positively correlated with the ability to mobilize capital and diversify risk on an economy wide basis (Agarwal 2001). La Porter et al. (1997, 1998) and Levine and Zervos (1998) used the market capitalization to GDP ratio as an indicator of market development. Table 1 and figure A. show the size of Bangladesh stock market. Market capitalization ratio has increased from 1.4 % in 1990-91 to 10.2 % in 2005-06 with a sudden increase to 29.0 % in 2006-07 .Total market capitalization reached to Tk. 1366.53 billion in 2006-07 from Tk. 11.485 billion in 1990-91.This shows a remarkable cumulative increase of 117.98 times . Mean market capitalization ratio of 0.077 with a standard deviation of 0.073 points to high level of volatility in market capitalization. Linear trend line shows an upward trend in market capitalization to GDP ratio though R2 value of 0.3821 indicates a poor model fit.
Stock market size of Bangladesh
Year GDP(billion Taka)
Market capitalization (billion Taka)
Market capitalization
to GDP
Year GDP(billion Taka)
Market capitalization(billion
Taka)
Market capitalization
to GDP
1990-91
834.39 11.485 0.014 1999-00 2370.86 120.69 0.051
1991-92
906.5 10.397 0.011 2000-01 2535.46 121.586 0.048
1992-93
948.07 12.29 0.013 2001-02 2732.01 131.73 0.048
1993-94
1354.12 18.098 0.018 2002-03 3005.80 182.899 0.061
1994-95
1525.18 80.657 0.051 2003-04 3329.73 439.934 0.132
1995-96
1663.24 315.149 0.189 2004-05 3707.07 453.018 0.122
1996-97
1807.01 124.134 0.069 2005-06 4157.28 420.850 0.102
1997- 2001.77 91.637 0.046 2006-07 4674.97 1366.53 0.290
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98
1998-99
2196.97 81.324 0.037
Descriptive statistics of Market capitalization
to GDP ratio
Mean Standard deviation
Kurtosis Skewness Minimum Maximum
0.077 0.073 3.745 1.864 0.011 0.290
Data source: Authors’ calculation from various issues of Bangladesh Economic Review, Statistical Year Book of Bangladesh, Dhaka stock exchange (main board) and Securities and
exchange commission (Annual report and quarterly review).
The second indicator of market size is the number of listed companies. The rationale of including this measure is that as the number of listed company increases, available securities and trading volume also increases. Table 2 shows that during the period under study, number of listed company has grown from 149 to 273 with an average annual growth rate of 4.421% and a standard deviation of 39.006. The upward trend line (figure B) with R2 value of .9589 points to stable growth in the number of listing.
6.3 Problems of DSE:
The unexpected rise and fall in share price mostly followed from the general confidence of the
investors about political stability, euphoria of investment in shares, prospect of quick capital
gains, a vacuum in respect of institutional presence in the share market, monopolistic dominance
of member brokers, inefficiency of the SEC to cape with development, existence to kerb market,
absence of proper application of circuit breaker etc. Delivery Versus Payment mechanism was
used as one of the main vehicles of manipulation. Kerb market give birth fake and forged share
certificate. Although there are increasing tends in all the indicators, DSE is not free from
problems. The problems of DSE may be summarized as under.
Price manipulation: It has been observed that the share values of some
profitable companies has been increased fictitiously sometimes that hampers the smooth
operation of DSE.
Delay in settlement: Financing procedures and delivery of securities sometimes
take an unusual long time for which the money is blocked for nothing.
Biased in dividends: Some companies do not hold Annual General
Meeting (AGM) and eventually declare dividends that confused the shareholders abour the
financial position of the company
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6.4 Conclusion:
We aimed at evaluating the growth of Bangladesh stock market over last decade in terms of some commonly used indicators of stock market development. Our analysis reveals that the Bangladesh’s stock market is growing in terms of market capitalization to GDP, turn over ratio, value traded to GDP and number of listed companies, although the growth over time is not stable and has not yet assumed any obvious pattern. . It also remains highly volatile and concentrated with foreign portfolio investment gradually disappearing.
Appendix
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Appendix
A Questionnaire on
“Profile of Dhaka Stock Exchange(DSE) Ltd”
Dear respondent,
This questionnaire has been designed to conduct a research for the partial fulfillment the course
requirement of Internship, Bachelor of Business English program, Faculty of Business
Administration of International Business Administration and Information System
University. I will appreciate your valuable time & support in filling the questions. Your
cooperation and active participation will enable me to conduct the research work successfully.
Please be assured that the information you provide will be strictly confidential and will be used
only for academic purposes.
Thank you in advance.
Name : ____________________________________________
Occupation: a) Employee of DSE b) Owner of Brokerage House
c) Investor d) General Public
Sex : a) Male b) Female
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Section 1: In General/Common
1. Do you know/heard about DSE and its activities?
a) Yes b) have a little idea c) never.
2. Do you participate any function of DSE?
a) Yes b) No c) Cannot remember
3. Do you know the present Board of Directors of DSE?
a) Yes b) No c) Little bit d) it’s not important
4. Do you think that stock market is important for a country economy?
a) Yes b) No c) I don’t have proper idea d) May be
5. Are there any one in your family investing at Dhaka Stock Market?
a) Yes b) I don’t know c) Not in my family but my other relatives
6. If YES, are they getting profit or losing money?
a) They are in Profit b) They losing money c) I don’t know
7. Do you watch programmed related to stock market on TV?
a) Regularly b) Irregularly c) Never
8. Do you ever enter in the website of DSE?
a) Everyday b) Sometimes c) Once d) Never
8. Do you read DSE’s news, publications on newspaper?
a) Regularly b) Irregularly c) No
9. Do you observe DSE’s Outdoor activities (Press conference, awareness programmed etc)?
a) Regularly b) Irregularly c) No
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10. How will you rate the quality of the Press Release and
Awareness Program of DSE based on the massage structure,
sound, communication, & contents?
[Scale: 5. Excellent; 4. Very Good; 3. Good; 2. Average; 1. Unsatisfactory]
Press Release Awareness Program
SL Quality 1 2 3 4 5 1 2 3 4 5
A Massage Structure
B Information
C Visual
D Content
11. What you think, how can DSE can aware general public to make the stock market
more concrete and helpful for country people?
a) Arrange regular Training program for General investor
b) DSE can take the help of different mass media (as an example: newspaper, TV, Radio etc)
c) Take more action to regulate stock market more efficiently so that people can think before
their investment
Section 2: DSE employee and Brokerage House employee
13. How you think why DSE is important for country like Bangladesh?
a) Its important as at least 7 million people is depends on it
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b) Its contribute country’s GDP
c) Our country can further ahead by collecting money from stock market
d) If we can listed all our foreign company they will more royal for our country
14. What is the maximum duration of “A” category share in DSE?
a) T+5 days b) T+3 days
c) T+10 days d) T+7 days
15. Do you know about TESA (The Electronics Securities Architecture)?
a) It’s a software where investor give their sale or buy order
b) Its a software where people see the current transaction of share
c) It’s a software where all order are executed
d) Above all
16. Do you know about settlement circle of DSE?
a) Yes b) No c) little bit
17. How Important the work of surveillance of DSE?
[Scale: 1. Most Important; 2. Important; 3. Average; 4. Somewhat Important; 5.Least]
Rank Factors
Most Important Safety of InvestorAverage Make the transaction clearimportant Give the market in a position
18. Any suggestion that you have for improving the work of DSE ?
…………………………………………………………………………………………………
…………………………………………………………………………………………………
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…………………………………………………………………………………………………
…………………………………………………………………………………………………
Bibliography
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Books and Journals:
Nassar David, How to Get Started in Active Trading and Investing , 2005
Jiler William, How Charts Can Help You in the Stock Market
Oliver Velez and Greg Capra, Tools and Tactics for the Master Day Trader: Battle-Tested
Techniques for Day, Swing, and Position Traders
R.N Agarwal, “Financial integration and stock markets in developing countries: A study of
growth, volatility and efficiency in the Indian stock market”, 2000
Levine R. and Zervos S. “Stock markets, bank, and economic growth”, American
Economic Review, 1998
Singh A,Financial Liberalization, Stock Markets and Economic Development",1997
Internet Sources:
www.dsebd.org
stockbangladesh.com,
www.dsemonitor.com,
www.mydse.com,
Dhaka-stockexchange.blogspot.com,
icbdm.com,
www.bdstock.com,
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http://www.makemoney.usersboard.com,
www.bdwebguide.com/sharebazar.htm,
www.anfmanagement.com,
Twitter.com/DSE_BD,
http://hubpages.com/hub/Dhaka-Stock-Exchange
www.emerginvest.com/WorldStockMarkets/Bangladesh
www.bd-experts.com
www.bangladeshdir.com
www.docstoc.com
Dse-secretinfo.forumotion.com
Financial-dictionary.thefreedictionary.com
www.sandpworld.com
www.markosweb.com
http://www.accessmylibrary.com/coms2/summary_0286-26621391_ITM
http://bdshareeducation.blogspot.com/
http://financemarket.onlinenewsbd.com/
http://www.blog.sajjadbd.com/2010/05/profita/
http://www.stockbangladesh.com/ami_broker_feed_form.php
http://www.investopedia.com/university/beginner/
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http://www.investopedia.com/default.aspx
http://www.blog.sajjadbd.com/2010/05/profita/
http://www.bdbooks24.co.cc/search/label/Toslima%20Nasrin
http://pujibazar.blogspot.com
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