Chapter OneIntroduction

1.1 Background of the Problem :

The capital market is the engine of growth for an economy, and performs a crucial role in acting as an intermediary between savers and companies seeking additional financing for business expansion. Stock market is part & parcel of capital market. Contribution of any stock exchange generally leads to economic growth by increasing the funds to finance industry and other enterprise.

Stock Exchange is an autonomous body formed by shareholders/members. It can take various decisions independently. The objective of Stock Exchange is to provide a market place along with facilities for bringing together the buyers and sellers of securities, promote just and equitable principles of trade, protect the interest of the investors.

Historical Background of the Dhaka Stock Exchange:

Dhaka stock exchange is the main stock/share market in Bangladesh. Its the first stock market launched in Bangladesh. Dhaka stock exchange started its journey in 1954. At that time there was no digitalized stock market in Bangladesh, only handmade paper was available. But now there are over 750 companies are involved in share market and our stock market is fully computerized though we all cant buy/sell from home but actually transaction is happening over the computer. Our stock market named was Stock Exchange Association Ltd in 1954 and started its journey from East Pakistan. First formal trading started in 1956. After six years of trading its name was renamed toEast Pakistan Stock Exchange Ltd, remember it was in 23 June, 1962. Two years passed and in 13th may 1964 again it was renamed to DaccaStock Exchange Ltd. We all know that our liberation year took place in 1971, a nasty war killed many Bangladeshis, and so the market collapse at that time and it didnt operate for five years. In 1976, share market got its life back and started its journey in a free country named Bangladesh.Now in this twentieth century there are two main stock market in Bangladesh, One is called DHAKA STOCK EXCHANGE and other one is called CHITTAGONG STOCK EXCHANGE. The automated tradingwas initiated in 10 August 1998 and started on 1 January 2001. Before 1998 there was all papers, no perfect calculation was there. One can apply for several times for a primary share, share prices were increasing by people mouth to mouth, above all before 1998 there was high manipulated game going on our stock market. As a result its collapsed in 1996, many people became hopeless, they were terrified, and they didnt want to get involved again in share market. Moreover, they became angry if someone talked about share market! This is the truth, these things really happened in 1996. There was very low volume trade going on. There was no manipulation game after the crash. People almost forgot about stock market.After years of strugglingCentral Depository Systemwas initiated in 24th January 2004. People got confident again about the stock market because all things were computerized. They were again involving themselves in stock market. The volume of returning investors were quite low but there were new investors coming forward to the share market. Its started bubbling from 2005.As of November 16, 2009, the benchmark index of the Dhaka Stock Exchange (DSE) crossed 4000 points for the first time; everyone was talking about share market again. There were no specific categories of people; everyone was trying to get involved in share market. Either they have knowledge about stock market or not they need to involve making good money from the market. In 2009, share market means easy profit actually 100% profit, all shares prices were increasing day by day. No signal of any fall or wrong movement. Bubbling, Bubbling, Bubbling. Money was forwarding to share market from every possible sector. Do you remember what happened in 1996? Exactly the same thing was happening in 2009, though the stock market was computerized but what do you think is going to happen if you are pouring water on a jog continuously? In 2010, the index crossed 8500 points, it almost reached 9000 point! Then all of a sudden we have seen 600 indexes fall on a single day though it was recovered by 550 points that day but thats the first signal of crash and finally crashed in the first quarter of 2011. Millions of investors lost their money and came out onto the street blaming the speculators and regulators for the bubble that finally burst.This is 2015 now. Four years passed! But DSC & CSC is still not in stable condition. Investors are still confused, frustrated and sometimes hopeless. Many investors died or left the market after the crash. We all wish and hope that the market will get the stability in upcoming days.

Function of Dhaka Stock Exchange

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) 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 bye laws 1997). Investors Protection Fund (As per investor protection fund Regulations 1999) Announcement of Price sensitive or other information about listed companies through online.

Mission of Dhaka Stock Exchange

The Dhaka stock exchange will create a successful well-organized and transparent market of international standard to save and invest in Bangladesh in order to facilitate the competent entrepreneurs to raise capital and speed up industrial growth for overall benefit of the economy.

Objectives of Dhaka Stock Exchange

The prime objective of the DSE is to create a nation-wide stock market also beyond the national boundary, which will simultaneously act as a platform for industrial entrepreneurs and general investors. Explicitly the objectives of DSE are following:

To develop a strong platform for the entrepreneurs for raising capital. To provide an investment opportunities for small and large-scale investors. To develop a transparent market ensuring investors interest. To provide a fully automated trading, Clearing and settlement system to ensure quick, easy, accurate and easily accessible to all transactions. To attract non-resident Bangladeshis to invest in Bangladesh Stock market. To attract foreign institutional investors to invest in Bangladesh stock market. To collect, preserve and disseminate data and information on stock market. To develop a corporate culture through mandatory corporate membership. To develop a research cell for analyzing status of the market and economy.

1.2 Statement of the Problem

The key problem of this topic is the trading system of DSE. We can find out from this report who is the benefited by investing money in The DSE. What facilities provide DSE? Why we invest money in DSE? What impact in our economy? What is the system of trading? Who can trade? What is brokerage house? Why brokerage house need for trading?

Basically through this report we will be able trace out a concrete idea about the topic entitled in this report.

1.3 Purpose of the study

The prime objective of the study is to study and evaluate the trading system of DSE. In this regard the specific relevant objectives of study are as follows:

To examine the trading system of DSE. To know growth, development, organization and management of DSE. To examine current issues of DSE. To evaluate trading order and settlement system of DSE. To identify the problems and prospects of DSE.

1.4 Importance of the study:

Trading system is one of the most important functions of stock market operation. This report tries to find out the trading system of Dhaka stock exchange. Stock market is an essential part of capital market. Trading has now become automated, led by the Dhaka Stock Exchange through the central depository. In the present automated trading environment, bids/offers, depth, and required broker particulars are all recorded and can be retrieved for future reference.

1.5 Scope of the study

The scope of this report is to find out the overall performance of DSE in the stock market. The report is basically divided into two parts:

The Organization Part The Analysis Part

The organization part of the report gives an overview of Dhaka Stock Exchange. It focuses upon the history of DSE, formation, management, objectives of DSE and functions of DSE. The study also concentrates upon the different functions performed by DSE including surveillance activities.

The analysis part of the report basically evaluate the performance of Dhaka Stock Exchange through different performance measurement indicators such as performance of different indices, IPO offering, performance of enlisted securities, DSE turnover, market capitalization etc. in the last portion some finding of the present problems of DSE and some recommendations are addressed.

1.6 Definition of termsA Depository defined as: A facility for holding securities, which enables securities transactions to be processed by book entry. Physical securities can be immobilized by the depository or securities may be dematerialized (so that they exist only as electronic records).

A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" can be used to refer to stocks that trade via a dealer network as opposed to on a centralized exchange. It also refers to debt securities and other financial instruments such as derivatives, which are traded through a dealer network.

The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.

An automated trading system (ATS) is a computer program that creates orders and automatically submits them to a market center or exchange.

Internet trading system is the act of placing buy/sell orders for financial securities and/or currencies with the use of a brokerage's internet-based proprietary trading platforms. Stocks, bonds, options, futures and currencies can all be traded online.

Chapter TwoLiterature Review

Literature ReviewHaque et al (1998) examined whether the introduction of automated trading along with the changes in regulatory measures changed the risk return composition and thus improved the market efficiency of the DSE. They conclude that the DSE at best can be considered as weak form efficient and the automation & other regulatory measures have done little or nothing at all to change the risk return composition of the market.

Mobarek and Keasey (2000) concluded that DSE does not follow random walk model and there are significant autocorrelation at different lag causes of DSE in that their forms are not weak in efficiency.

Haque et al., (2001) described the experience of DSE after the scam of November 1996 by applying capital Asset pricing model (CAPM) and efficient market hypothesis (EMH).

Islam and Khaled (2005) analyzed on the predictability of the share price in DSE prior to the boom in 1996 and found evidence in favor of short-term predictability of share prices.

Mobarek and Mollah (2005) suggested that there are some factors (beta, size, the ratio of price-to-book value, volume of shares traded, earnings yield, cash flow yield, dividend yield and leverage) that influence share returns on the DSE.

Akhter and Quddus (1996) reveal that initial subscriber obtain the same return whenever they dispose of their shares in Initial Public Offerings (IPOs) in a short period of about five or six months. They used mean adjusted performance index to analyze price behavior of unseasoned new issues from the point of view of initial subscribers who are interested only in short-run. They found that the standardized mean excess return were virtually the same in first 30 trading days and concluding 30 trading days of the first 100 trading days since debut.

Chapter ThreeResearch Method

3.1. Design of Research: In this study data was collected and information were tabulated, processed and analyzed crucially in order to make the paper fruitful, informative and purposeful. The report has been prepared on the basis of the experience gained during the period of the internship. To prepare the report of internship, I have collected all kinds of related data from the primary and secondary sources.

Mainly I used two types of data in preparing this report.

Primary data Secondary data

Primary data:

This report has basically prepared based on secondary data but I have included few things from my experience as I have been working in this sector. Following method are used to collect primary data.

Direct Involvement:

I have tried to collect the data and issues who is directly involve with this sector Specially DSE persons & DSE officers and some inventors who invest money in Dhaka stock Exchange Personal interview:

1. The primary data were collected through face-to-face interview with the DSE officials.

2. The primary data were collected through participation and discussion during the trading session.3. I had also collected information through interview with the DSE members.

4. I had collected information through interview by the questionnaire with the investors by visiting various brokerage firms.

Observation Method: I personally went to the all concerned authorities who are involved with this.

Secondary data:

Basically the report is furnished based on Secondary data as trading system of DSE can be found only based on secondary data. There is very less authentic source to be traced of trading system of DSE as this is not related with any public source. All sourced from published or processed materials. I have collected secondary data from the following sources.

1. Various types of officials sources. 2. Various publications of Dhaka stock exchange. 3. Trade journals. 4. Research reports connected with the stock exchange. 5. DSE website and some others sources.

Design can extend experience or ad strength to what is already known through previous research.

3.3 Instrumentation Office -2007 (Word & Excel)

3.4 Data Analysis

MARKETSTable: 3.1

Public Market: In this market instruments are traded in nominal volume. Only trading of market lot share is done here through automatic matching.

Spot Market: Instruments are traded in nominal volumes under corporate action if any. Spot transactions are done here through automatic matching which must be settled within 24 hours.

Odd lot Market: Odd lots of all Instruments are trade in this market. Odd lot scripts are traded here based on pick and fill basis.

.Block Market: Instruments are traded in bulk volume. It is a place where bulk quantities of shares are traded through pick and fill basis.

CLASSIFICATION OF CATAGORIESCriteria of the share Category:A Category Companies: Companies which are regular in holding the Annual General Meetings (AGM) and have declared dividend at the rate of 10 percent or more in a calendar year. (Mutual fund, debentures and bonds are being traded in this category).B Category Companies: Companies which are regular in holding the AGM but have failed to declare dividend at least at the rate of 10 percent in a calendar year.N Category Companies: All newly listed companies except Greenfield companies will be placed in this category and their settlement system would be like B-Category companies.Z Category Companies: Companies which have failed to hold the AGM or failed to declare any dividend or which are not in operation continuously for more than six months or whose cumulated loss after adjustment of revenue reserve, if any is negative and exceeded its paid up capital.

INDEX OF DSE

There are three indices in the DSE as follows:Table 3.2: Index of DSESl.NoIndex NameBase IndexRemarks

1DSI (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

3DS201000 (as on 01-01-2001)

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.The all Share Price Index (DSI) comprises all listed securities of the exchange which has been calculated since November 01, 1993 calculated on the basis of price movement of individual stocks using IFC method. Earlier a price average index was in practice which was not perfect.

Table: 3.3 DSE Performance: Jan 2014 to Dec 2014DSE Performance: Jan 2014 to Dec 2014

Month DSE Turnover Ratio of Turnover to Market Cap. Index

Value Tk. in mn Volume Nos. mn DSEX DSE 30 DSES

Jan-14 125,263.03 2,844.29 0.04 4,753.17 1,660.36 974.27

Feb-14 109,616.29 2,227.32 0.04 4,749.87 1,693.91 1,002.41

Mar-14 73,018.71 1,302.24 0.03 4,491.98 1,603.53 975.96

Apr-14 97,977.61 1,762.14 0.03 4,566.86 1,671.93 1,018.20

May-14 58,457.67 1,357.16 0.02 4,430.48 1,609.27 992.82

Jun-14 77,349.71 1,678.03 0.03 4,480.52 1,644.75 1,019.34

Jul-14 41,156.83 1,045.80 0.01 4,427.16 1,626.52 1,004.66

Aug-14 126,589.06 2,856.20 0.04 4,549.52 1,713.83 1,057.37

Sep-14 175,809.67 3,894.85 0.05 5,074.31 1,960.87 1,195.53

Oct-14 127,656.08 2,955.57 0.04 5,173.23 1,949.48 1,220.04

Nov-14 115,494.28 2,534.75 0.04 4,769.43 1,760.06 1,106.77

Dec-14 60,132.60 1,537.81 0.02 4,864.96 1,803.06 1,150.22

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.Figure: 3.1 Index movements for the year 2014 Comment: The above table and graph shows the movement of price from Jan14, 2014 to Dec-14, 2014. In this year the highest and lowest, DSEX-5,173.23 & 4,427.16, DSE-30-1,960.87 & 1,603.53, DSES- 1,220.04 & 974.27 respectively. We can see from the above graph that the price of the DSI Index has an increasing trend. Table: 3.4 DSE Performances: January to December 2013DSE Performance: January to December 2013

Month DSE Turnover Ratio of Turnover to Market Cap. Index

Value Tk. in mn Volume Nos. mn DSEX DSE 30

Jan-13 38,957.79 1,191.23 0.02 4,136.31 1,488.56

Feb-13 72,116.95 1,782.15 0.03 3,973.28 1,431.90

Mar-13 33,305.70 832.06 0.02 3,590.05 1,340.15

Apr-13 32,264.20 1,041.00 0.02 3,438.90 1,282.59

May-13 60,015.87 1,825.01 0.03 3,878.07 1,426.75

Jun-13 132,366.22 3,170.10 0.05 4,104.65 1,532.55

Jul-13 153,046.47 2,764.56 0.06 3,940.81 1,483.07

Aug-13 71,455.36 1,297.26 0.03 4,127.48 1,540.02

Sep-13 103,344.28 2,194.90 0.04 3,937.68 1,440.53

Oct-13 47,215.28 1,334.68 0.04 3,967.73 1,408.15

Nov-13 109,185.68 3,094.41 0.04 4,230.73 1,503.78

Dec-13 99,468.29 2,461.16 0.04 4,266.55 1,466.25

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.Figure: 3.2 Index movements for the year 2013

Comment: The above table and graph shows the movement of price from Jan 13, 2013 to Dec-13, 2013. In this year the highest and lowest, DSEX- 4,266.55 & 3,438.90, DSE-30- 1,532.55 & 1,282.59 respectively. We can see from the above graph that the price of the DSI Index has an increasing trend.

Table: 3.5 Monthly Performance for one year (DSE Performance - December 2012)

DSE Performance: January to December, 2012

Month DSE Turnover Ratio of Turnover to MCap. Index

Value Tk in mn Volume Nos. mn DSI DGEN DSE 20

Jan-12 88,770.51 1,784.57 0.04 3,488.99 4,153.96 3,299.90

Feb-12 57,243.72 1,379.71 0.02 3,927.03 4,695.41 3,713.93

Mar-12 84,123.09 1,754.04 0.03 4,172.95 4,990.32 3,777.20

Apr-12 176,602.65 2,944.81 0.07 4,280.14 5,098.90 3,878.27

May-12 66,918.19 1,269.54 0.03 4,007.33 4,734.33 3,643.97

Jun-12 39,363.75 841.50 0.02 3,877.64 4,572.88 3,529.30

Jul-12 40,564.11 934.26 0.02 3,518.62 4,159.17 3,296.42

Aug-12 57,276.61 1,290.43 0.02 3,761.89 4,446.87 3,471.76

Sep-12 187,615.11 4,167.25 0.07 3,845.69 4,544.41 3,501.60

Oct-12 106,495.29 2,681.87 0.04 3,798.98 4,493.92 3,506.74

Nov-12 55,380.71 1,497.07 0.02 3,560.10 4,210.58 3,416.16

Dec-12 40,731.12 1,143.63 0.02 3,577.21 4,219.31 3,472.56

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.Figure: 3.3 Index movements for the year 2012

Comment: The above table and graph shows the movement of price from Jan01, 2012 to Dec-01, 2012. In this year the highest and lowest, DSI-4,280.14 & 3,488.99, DGEN- 5,098.90 & 4,153.96, DSE 20- 3,878.27 & 3,296.42 respectively. We can see from the above graph that the price of the DSI Index has an increasing trend.

Table: 3.6 Monthly Performance for one year (DSE Performance - December 2011)DSE Performance: January 2011 to December 2011

MonthDSE TurnoverRatio ofTurnover toMarket Cap.Index

ValueTk in mnVolumeNos. mnDSIDGENDSE 20

Jan-11186,969.241,442.650.066,198.827,484.234,701.74

Feb-11114,887.121,020.380.054,317.895,203.083,514.51

Mar-11217,125.141,967.890.085,275.136,352.103,968.38

Apr-11156,284.381,375.910.065,032.956,050.853,826.22

May-1192,211.281,035.360.034,798.375,758.263,795.86

Jun-11134,650.481,519.330.065,093.196,117.234,069.10

Jul-11298,172.993,446.750.105,380.106,459.624,264.63

Aug-1188,648.651,103.550.045,195.686,212.004,190.47

Sep-1170,572.48819.430.024,944.965,910.204,080.05

Oct-1169,990.40929.940.044,205.075,036.503,749.96

Nov-1169,514.861,026.090.034,403.375,268.553,894.68

Dec-1161,529.821,279.870.024,383.945,257.613,910.33

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.Figure: 3.4 Index movements for the year 2011

Comment: The above table and graph shows the movement of price from Jan01, 2011 to Dec-01, 2011. In this year the highest and lowest, DSI-6,198.82 & 4,205.07, DGEN- 7,484.23 & 5,036.50, DSE 20- 4,701.74 & 3,749.96 respectively. We can see from the above graph that the price of the DSI Index has an increasing trend. Table: 3.7 Monthly Performance for one year (DSE Performance - December 2010)DSE Performance: January 2010 to December 2010

Month DSE Turnover Ratio of Turnover to MCap Index

Value Tk. in mn Volume Nos. mn DSI DGEN DSE 20

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

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

Oct-10 468,008.97 2,265.35 0.14 6,612.14 7,957.12 4,533.18

Nov-10 471,717.20 2,233.33 0.13 7,135.16 8,602.44 5,119.13

Dec-10 387,174.09 2,275.47 0.11 6,877.66 8,290.41 5,204.98

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.Figure: 3.5 Index movements for the year 2010

Comment: The above table and graph shows the movement of price from Jan01, 2011 to Dec-01, 2011. In this year the highest and lowest, DSI-7,135.16 & 4,422.81, DGEN- 8,602.44 & 5,367.11, DSE 20- 5,204.98 & 2,952.01 respectively. We can see from the above graph that the price of the DSI Index has an increasing trend.

Major index return on DSE Figure: 3.6 Major index returns on DSE

The Bangladesh Stock Market (DSE General) increased to 4943.73 Index points in December from 4769.43 Index points in November of 2014. Stock Market in Bangladesh averaged 1908.63 Index points from 1990 until 2014The Bangladesh Stock Exchange All Share Price Index tracks the performance of all companies listed on the Dhaka Stock Exchange. Bangladesh Stock Market (DSE General) - actual values, historical data, forecast, chart, statistics, economic calendar and news. Content for - Bangladesh Stock Market (DSE General) - was last refreshed on Tuesday, December 16, 2014.

IPO OFFERING IN DIFFERENT YEARAn initial public offering (IPO) referred to simply as an "offering" or "flotation," is when a company (called the issuer) issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by huge privately-owned companies looking to become publicly traded.

Figure: 3.7 IPO OFFERING IN DIFFERENT YEAR

From the above the graph, it can be seen that in year 2004, the number of companies that had offered IPO was only 3 but in the following year it stood at 18. From year 2005 to 2014, the number of IPO offering companies ranges from 10 to 18. The highest IPO offering is 18 in year 2005 &2009 and lowest IPO offering is 3 in year 2004.

Comparison of IPO and Listing

Table 3.8: Comparison of IPO and Listing

Year Listing IPO

2009-101514

2010-111516

2011-121817

2012-132321

2013-142522

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.Figure: 3.8

In year 2009-10, the listing of the companies at DSE was 15 and the IPO offering by the companies is 16. The highest number of listing of companies in DSE was in the year 2013-2014 which is 25. On that year, the IPO offering was 14. On the other hand, the highest number of IPO offering by the companies was 22 in year 2013-2014

NUMBER OF ENLISTED SECURITIES

Table 3.9: Category wise total securities up to June 30, 2013

CatagoriesNumber of Securities

Companies251

Corporate bonds 03

Trasuary bonds 221

Mutual funds 42

Debenture 08

Total 525

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.

Figure: 3.9

Among all the securities, the number of listed companies has stood at 251 up to June 30, 2013 where it was 319 in the end of 2013, a total of 68 companies securities have been sent to OTC Market. So the securities of those 68 companies has also been sent to OTC market in those are excluded here. Figure: 3.10 Showing the Listed Securities of DSE (2001-08)

Scenario of Trade of securities in 2012- 2013

In 2013-13, the Volume of trade of listed securities increased sharply at the Dhaka Stock Exchange. In 2012-13, a total of 2155 crore and 61 lakh securities were traded on Dhaka Stock Exchange, The value of which stands at tk. 85 thousand 708 crore and 97 lakh. On the other hand, 1857 crore and 97 lakh securities were traded in 2011-2012, the value of which is tk. 117145 crore and 14 lakh. The number of trading days was 235 days in 32012-13, which was 238 daysin 2011-12. The average number of securities traded was 9.17 crore in 2012-13 and average transaction was tk. 364.72 crore. On the other hand, 7.8 crore securities waswere traded in 2011-12 and average transaction was tk. 492 crore 20 lakh.

PERFORMANCE OF LISTED SECURITIES

Performance of Listed Securities from year 2004 to 2009 is given bellow

Table: 3.10Year Listed Securities Cash Dividend AGM Held

2009-10445117234

2010-1149095211

2011-12515105226

20123-13529123139

2013-14552139265

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.Figure: 3.11

In 2009-10, the listed securities were 445 and it was increasing every year & 2013-14 was being 552. On the hand cash dividend was being up and down every year. In 2010-10 it was very down, only 95 cash dividend & 2013-14 was very high & it was 139. But not more increasing AGM held against increasing no. of listed securities. In 2013-14 no. of AGM held was 265.

MARKET CAPITALIZATION

Market Capitalization is one of the indicators of market performance. It is the total market value, at the current stock exchange list price of the total number of equity shares issued by a company.

Market Capitalization = (No. of Issued Share * Close Price)

Table 3.11: Market Capitalization.Year Amount in TK. MM% of annual Growth

20091903228.05-

20103508005.8084.32

20112616730.54-25.41

20122403555.62-8.14

20132647790.8310.16

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.

Growth rate of market capitalization from 2009 to 2013 is shown below by a line chart:

Figure: 3.12\

Growth pattern of market capitalization has shown in this chart. During 2009 & 2010, DSE market capitalization has increased from the previous year. But market capitalization has exceptionally increased in 2010, amount was Tk. 3508005.80 million and growth was 84.32% but in 2011 it decreased by a huge amount. Growth rate decreased to 25.41% from 84.32%. It is also reflected from the table that market capitalization of different year has fluctuate at a larger percentage.Total Turnover in Volume

Volume of the share traded as a percentage of total share listed on an exchange during a period, usually either a day or year. The same ratio is applied to individual securities and the portfolios of individual or institutional investors. Table: 3.12 Year Total Turnover in Volume (mn)Growth

20084605.38-

2009797373.13

201016975112.90

201116967-0.04

20122168927.83

2013229895.99

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange.Growth rate of Total turnover in volume from 2004 to 2010 is shown below by a line chartFigure: 3.13

This chart shows the total turnover in volume in DSE. From this table it is reflected that total Turnover in volume has increased 2009 from the previous year the amount was 7973mn from 4605.38mn. The growth rate of turnover in volume of DSE has increased to 73.13% in 2009 and the value decreased in 2011. Again the value has exceptionally increased in 2012, amount was Tk. 21689 million and growth was 27.83 %. The total turnover in volume was highest in 2010 and the value was 16975mn and growth rate was 112.90% and lowest in -0.04% in 2011. The average growth rate of total turnover in volume of DSE is 73.15%.

Total Turnover in ValueThe total value of stock sold in a year divided by the average value of goods held in stock. This checks that cash is not tied up in stock for too long, losing its value over time.

Table 3.13: Total Turnover in Value

Year Total Turnover in Value (mn)Growth

2008667964-

20091475301120.87

20104009913171.80

20111560912.09-61.07

20121001084.90-35.87

2013952742.08-4.43

Source: Compiled from different issues of monthly review, Dhaka Stock Exchange. Growth rate of Total turnover in value from 2008 to 2014 is shown below:Figure: 3.14

This chart shows the total turnover in value in DSE. From this table it is reflected that total Turnover in volume has increased 2009 from the previous year the amount of value was 1475301mm from 1475301mn. The growth rate of turnover in volume of DSE has increased to 171.80% in 2010 and the value decreasing start form in 2011. The average growth rate of total turnover in volume of DSE is 73.15%.

Sector-wise Turnover performance in 2012-13

Figure: 3.15

An analysis of the sector of transaction in fiscal 2012-13 shows that the fuel & power sector has retained its top position accounting for 15.89 % of total transaction against 22.45 % of the banking sector in the previous year. Other performs in financial 2012-13 are textile 13.31%, bank 11.37% travel & leisure 9.15% pharmaceuticals 8.29%, engineering 7.50%, NBFI 5.54%, Telecommunication 5.48%, mutual fund 5.16%, insurance 4.81%, cement 3.71%, and miscellaneous 3.02%.

Types of Trading System of DSE: Cry-Out System Automated Trading System Internet Trading System

Cry-Out System Before starting on-line trading system, at the Dhaka Stock Exchange, trading was conducted through Cry-out system. Under this system, Members and their Authorized of the Stock Exchange who have license to trade from the Securities & Exchange Commissions would come to the Stock Exchange Floor and participate in trading. But there were a number of shortcomings of this trading system.

Difficulties of Cry-Out System

The following difficulties were found in the cry-out system

Cry-out floor trading was inept and slows down the process of finalizing deals on the stock exchange floor between the stock dealers. There was a common complaint from the investors that, they didn't get fair price. They didn't know what actually happened on the floor. They had to depend on the broker and it was the market for the brokers not for the investors. To get rid of this problem, a new system is required to be developed. Manual Clearing and settlement system is clumsy and slow causing an affliction in stock exchange settlement department and ultimately limiting the trade volume and transactions. Participation in the Stock Market remains restricted within a community residing close to the Stock Exchange building. The business can't be reached out the common mass. Cry-out system was a noisy manual system; the open floor action was not only messy and tiring for the traders, but also difficult for the Stock Exchange to monitor the transactions as required by the rules and regulations. The manual system was error-phone. Errors were very difficult to detect in the current system.

To get rid of these difficulties, it was very essential at that time to start on-line trading i.e. Screen based trading system. On-line trading is automated by computer application.Automated Trading System

Figure: 3.16 Trading System of DSE

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.

DSE meet the potential growth of the trades and prospective investors, DSE has taken initiatives to upgrade its current Trading Application MSA to MSA-Plus (Upgraded TESA Client part), which was started on 10th June 2012.

DSE Trading System, Hardware Infrastructure:DSE Automated Trading System (HP Nonstop S7804) 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 scalable HP Nonstop S7802. DSE upgraded the Trading System again on 21st December 2008. The existing HP Nonstop S7804 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 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.

DSE Network Infrastructure Secured, structured & distributed LAN & WAN setup has been established to connect DSE TREC Holder Company Offices with the Central Server. Fast Ethernet Backbone, Fiber Backbone, Radio link, DDN, Dialup connections are established utilizing intelligent Switches, Access-Servers, Cisco Routers including CISCO IPS & IDS security system. Presently there are 229 Member House Server (MSA) (Primary connecting nodes) connected to the central Network. Around 4000 TWS are connected in the DSE Central Network through DSE LAN & expanded LAN and WAN setup. Presently DSE network POP at Dhanmondi is running smoothly to support Branches of the Brokerage houses. All network service providers (NSP) backbone connection and direct fiber connections from DSE to Brokerage House were taken to underground through NTTNs (Fiber at Home and Summit). To smooth support of Branch connectivity of Brokerage houses, DSE implemented hazard free single point solution for those connections through various vendors. Listed Network service providers are not required to lay cable up to the Brokerage house, they need to terminate the cable at DSE Setup for Branch support. More than 250 Workstations (including IP based devices like printer, scanner, photocopier etc) are supported by DSE official Network setup. CISCO Based Routing and Switching devices, along with Firewall (Check point and CISCO) are used for Network Infrastructure. Integrated Services Routers (CISCO 3900, 3800 and 2800 series router), Catalyst switches 2960 TCL & TTL, CISCO Firewall 5500, Checkpoint Firewall Safe Office devices are used to develop Network Infrastructure for DSE ICT Support.

Figure: 3.17 Basic Block Diagram of DSE Network

DSE Trading Software Core System Software & Database Trading Application, TESA TESA Solution Benefits Principal Functions of TESA DSE Trading System Communication Architecture Terminals, MSA Plus Terminals are as follows MSA Plus Deployment DiagramCore System Software & Database: The system software is HP Proprietary Non-Stop Kernel and includes the database as part of the operating system thereby eliminating the layer typically found in most Database Management Systems (DBMS). The existing database NONSTOP SQL is a distributed relational database management system that uses the ANSI-standard Structured Query Language (SQL) to describe and manipulate data. The Database is simply a different operational session for the operating system. The proprietary nature of the system software arguably enhances system security.HP system has its own Pathway built-in.

HP Pathway with Non-Stop TS/MP software provides application server functionality that allows developing and deploying mission-critical online transaction processing (OLTP) applications on HP integrity Non-Stop servers. Using this software, Developers can concentrate on implementing business logic without being concerned with Common application services such as load balancing, communications I/O, memory management, fault tolerance, and/or threading and scheduling. In this way, Pathway with Non-Stop TS/MP supplies a high performance highly available OLTP environment that is built-in rather than programmed it.

Trading Application, TESADSE has used TESA, The Electronic Securities Architecture, and application software as Trading Application. TESA software is built for the global securities markets. It uses fault tolerant computers, intelligent workstations and client/server design techniques. This provides cooperative 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 means that a new process does not need to be written to support each new device, only the API needs to be modified.

TESA was developed considering distributed Database concept using MS-SQL Database in MSA Plus replicating with HP Non Stop SQL of Trading Engine for intra-day information. MSA Plus is a Web Based Server Application running on the Member Server. Different Terminals use this client application, MSA Plus, using Web browser as a GUI (Graphical User Interface). Administrators, Traders, I Traders and Investors are performing trading activities using corresponding terminals.

TESA Solution BenefitsThe TESA application suite derives significant advantages from being implemented on the HP Non Stop platform. The HP Non Stop 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 Non Stop 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 Non Stop Server is massively scalable due to Parallel processors.

Principal Functions of TESA Market Information: Supplying all market information needed to formulate the buy and sell decisions. 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 TREC Holder Companies with efficient affordable GUI-based tools for accessing the market.

DSE Trading System Communication Architecture:

Figure: 3.18 DSE Trading System Communication Architecture

Terminals, MSA Plus Terminals are as follows: Various Terminals are used for Administration, Trading and Market View purpose.

Broker Terminal: Broker terminal is the gateway between the Users (Trader, Dealer, Investor and I Trader) and the Exchange. It needs to establish connection with trading system so that the Users can logon to the trading engine. Admin Terminal: Administrative functions within the Broker are carried out from the Admin Terminal like Client Registration, Trader Control, set buy Cash or sell Share Limit, investor registration, Logoff, Logon or Suspend etc. Broker can create ten Admin terminals to perform specified roles. Trader Terminal: Traders are users who trade on behalf of client or investors. Traders connect to the MSA Plus and then Login remotely to the Trading Engine to perform Order submits, modifies, withdraw, delete etc. Dealer Terminal: All Dealer activities are performed here as like Trader Terminal. Investor Terminal: Clients/Investors are allowed to place local orders through Internet (as per Client/Investor registration on Brokerage House). Investor can view Market information in Investor Terminal. A special purpose terminal, named I Trader, submits Investors Local order to the main Trade Engine. I Trader Terminal: I Trader user manage Investor orders; it is special purpose terminal to handle only the Investors Orders that are submitted through Internet. I Trader cannot perform general trading on behalf of Clients. View Terminal (non trade terminal): View Terminal users can locally login into MSA Plus application and access the information available locally. This Terminal can be used to view the Market (like Public Market), Market Depth, Market ticker, News, Index etc. Ten View Terminals can be created by an individual Broker.

MSA Plus Deployment Diagram

Figure: 3.19 MSA Plus Deployment Diagram

Trading sessions

TESA conducts trading in-5-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 withdrawn 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. 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. Closing: Closing prices are calculated and disseminated to market participants. Enquiry: Market will be closed in this session & other facilities like the previous enquiry session.

Internet Trading System:Internet Trading System (ITS) is DSE venture on behalf of the brokers. This site has been provided by the Dhaka stock exchange so as to give customers the convenience to trade or put orders on DSE from anywhere in the world irrespective of the trading hours of the stock exchange. The trading is done by registering on the site under some existing broker of the stock exchange.

Steps for trading through Internet:Register on the site as an investor. It is necessary to register under some existing broker/sub broker in the Dhaka stock exchange. For additional security there are two passwords, browsing password, which is reduced every time, a transaction like order entry, modification etc. is made.

Trading can begin only after the respective broker has approved the registration and assigned limits for trading. The investor can do trading during the trading hours of DSE as well as put offline orders during the non-trading hours, which get added into the system in the next trading session.

The investor can trade only unto the limit assigned to him by his broker. On exceeding this limit the investor gets suspended.

Procedures:

Agreement with a broker: As an individual investor you need to upon on accent with a broker. When you are willing to use Internet Trading facilities, you will need to fill in a special ITS account opening form. The terms and conditions to be followed by you and your broker for ITS, will be little different from the regular trading account. All brokers are not eligible for ITS. Please see in the relevant section of this website or e-mail to us for a list of brokers who can offer you ITS.

Although the form is available on the net, you still need to fill in and submit to the chosen broker a hard copy of the form duly filled in.

Additional trading system of DSE:

Odd lot trading mechanism Auction session trading Sport order trading Bulk order trading Big lot order trading

OVER THE COUNTER (OTC) MARKETDhaka Stock Exchange (DSE) has introduced the Over the Counter Trading (OTC) market on September 6, 2009 to segregate companies with weak fundamentals from its main trading frame. 'Over the Counter' refers to stocks that trade via a dealer network as opposed to on a centralized exchange. It also refers to debt securities and other financial instruments such as derivatives, which are traded through a dealer network. Instruments such as bonds do not trade on a formal exchange and are, therefore, also considered OTC securities. At the initial stage, 51 (present-68) companies have listed with OTC market.

In general, the reason for which a stock is traded over-the-counter is usually because the company is small, making it unable to meet exchange listing requirements. Also known as 'unlisted stock', these securities are traded by broker-dealers who negotiate directly with one another over computer networks and by phone. The OTC at Dhaka is a separate trading floor for the buyers and sellers of the companies that are removed from main board for some valid reasons. According to DSE, the reasons may include non-performance and/or weak performance of the companies and noncompliance of listing rules. Most of the Z-category companies are shifted to the OTC market. Z-category, a section in the DSE main trading frame, includes over 90 listed companies with weak performance.

3.6 Limitations of the study

It is true that most in the time doing some study on a subject or plan to research on a subject, every material of study would not be available all the time .I might face some problems or there must be some limitations. At the beginning stage of my study I have had some problem, like I did not get all relevant information. Sometimes I got information but later it turned into uncompleted or old information.

Another significant limitation of the study was time restriction. Even though I have given our full effort to make this report a good one, but it is too tough to perform well such an analysis within a shorter period of time. Though I have faced some other problems such as-unavailability of some information, technical problems which includes computer problem, virus problems, software problems, I also had problems regarding some brochures, file, information paper. But I did not give it up. I continued my quest. And I was able to get over the problems and limitations.

Despite my sincerest endeavor, the study suffers from some limitations due to various reasons, such as: Due to short time, I could not collect enough necessary data about the study to prepare the report. Some of key peoples of DSE were very much busy with their duties that they could seldom manage time to answer the questions. Investors are not fluently giving opinion due to some restriction. Researcher could not find sufficient data because of DSE great secrecy.Though the above limitations, I had tried with all of my efforts to know and find out the response pattern of the subjects and consultation of relevant record and document. Data have reached a fairly acceptable degree of accuracy.

3.7 Summary

Stock exchanges are absolutely important for the proper functioning of capitalistic economy. Capital markets serve to transfer capital form the surplus units to the deficit units. That plays an important role by mobilizing the funds to these who can make a proper and productive use of the sale. They also help the surplus units to be capable of earning returns by serving the economy to utilize their idle funds in accelerating the economic emancipation through employment generation. In such a manner the financial institutions especially the organized stock exchanges contribute to the industrialization to the country. Financial market include primary markets, floating initial public offering and secondary market were existing security of listed companies are being traded DSE is a nonprofit making organization. I am incorporated on 1954 as a limited co. by guarantee on 1956; floor trading was made with open cry- out auction system. DSE is a completely automated exchange with screen based trading facility on countrywide communication network. The automated trading system of Dhaka Stock Exchange has removed all the limitations of the traditional Cry-Out system. After launching the automatic trading system, Dhaka Stock Exchanges major problem has almost been solved. At present, there are no such major problems as was available during the Cry-out system Two types of Stock market, first one is primary market and second one is secondary market. Primary market issued shares first time, then the shares coming secondary market. Both primary and secondary market is dependable to one another. In primary market shares are issued by IPO to the public. In secondary market the shares, which are issued in the primary market, are traded through the brokers. There are four types of secondary market such as first market, second market, third market and forth market. There are five categories of companies are enlisted in CSAE. They are A, B, G, N & Z categories. Five categories companies are traded by three systems such as Call over trading system Automated trading system Internet trading system

Now trading has become automated, lead by DSE through central depository .The central depository Bangladesh limited (CDBL) was create in august 2000 to operate and maintained central depository system (CDS) of electronic book entry, recording & maintaining, securities accounts and reregistering transfer of securities. The objectives of establishing CDBL is provide CDS to at momentum to the growth and acceleration of our capital market. Under such circumstances, the depository act 1999 enabled and motivated the companies in private sector with join collaboration from the government to set up a security depository companies.DSE practices a daily netting system for its settlement. Members receive a net off statement on every trading day in the post closing session. Settlement system is the process in transferring money & shares of executed trade of buying & selling broker in a stock exchange. IT is an intermediary act as common agent. Stock exchange fixed the settlement period by which & executed trade must be settled.

From the forgoing discussion it can be said present automated trading environment, bids /offers, depth, required broker particulars are all recorded and can be retrieved for future reference. A developed market economy is always accompanied by a robust stock market. Since Bangladesh has adopted free market economy as her national policy to achieve her goals of higher growth and rapid privatization, she must revive her stock markets and make them capable of working as the main vehicle for mobilizing and allocating funds needed to finance the industrial and other development activities of the country.

In fact, no alternative path is suitable like a stock market to strengthen the financial base of a country, gear up its development activities and achieve its all-out economic emancipation. Dhaka Stock Exchange has been eminently supportive in many ways in this journey of capital market development in Bangladesh. In this brief span of its existence DSE has played a noteworthy role in the development of capital market in Bangladesh. DSE contribution is enormous in shaping where we stand now and success of DSE in this journey of development of capital market in Bangladesh largely depends on how it run its Trading System.

Chapter FourResearch Findings

Research FindingsStock market is part & parcel of capital market. Contribution of any stock exchange generally leads to economic growth by increasing the funds to finance industry and other enterprise. Stock Exchange is an autonomous body formed by shareholders/members. It can take various decisions independently. When I worked on this topic that time found some positive & negative impact. Many positive and little bit negative results have found from which is presented below:

Positive impacts Young investors are increasing in number Number of brokerage house has been increased so fast No. of securities company increasing every year. Today, general index is also in increasing. In 2011 market capitalization was fall but from2012 it again increasing every year. Sector wise turnover is also increasing. After launching the automatic trading system, Dhaka Stock Exchanges major problem has almost been solved. At present, there are no such major problems as was available during the Cry-out system At present, all share price index are used at the Dhaka Stock Exchange Dhaka stock exchange is functioning with very efficient, skilled and resourceful personnel. DSE practices a daily netting system for its settlement & Members receive a net off statement on every trading day in the post closing session. Introducing Central Depository System (CDS) To make appropriate the methodology of index, selective index should be calculated instead of all share price index Market makers create both demand for & supply of securities and to the consistency in the prices. DSE can introduce automate monitoring systems that may control price manipulation, malpractices and inside trading. To make arrangement to set up merchant banks, investment banks and floatation of more mutual funds particularly in the private sectors. DSE can make sure all the listed companies publish their annual reports with actual and proper information that can ensure the interest of the investors. DSE automated trading platform TESA and MSA plus is modernized time to time.

Negative ImpactsThere are some problems of DSE have been found. These are: It has been observed that the share values of some profitable companies have been increased fictitiously some times that hampers the smooth operation of DSE. All the information about DSE is not available. Some information which may be significant for the stakeholders like investors, researcher, students, public etc is not disclosed publicly. Some companies do not hold Annual General Meeting and eventually declare dividends that do not reflect the real or actual financial positions of the company and ultimately shareholders become confused. Lack of proper market monitoring Proper framework with strict rules and regulations that provides incentives and protection to investors is absent in DSE Insufficient technical Expert Like any other industry, people who invest or are involved in capital market activities, have not sufficient knowledge about the market and the product. Even, they dont know how to make a valuation of a share. As a result, they have to suffer losses. What has happened to the capital market in the recent past, have vividly demonstrated lack of knowledge all around thus resulting negative impact in every respect. Some stock exchange members also serve as director of listed companies. This can lead to the chance of insider trading especially in such a poorly regulated market. Lack of proper and adequate disclosures Lack of enforcement with the compliance of rules and regulations

Chapter FiveConclusions and Suggestions for Future Research

5.1 Conclusions

A developed market economy is always accompanied by a robust stock market. Since Bangladesh has adopted free market economy as her national policy to achieve her goals of higher growth and rapid privatization, she must revive her stock markets and make them capable of working as the main vehicle for mobilizing and allocating funds needed to finance the industrial and other development activities of the country. In fact, no alternative path is suitable like a stock market to strengthen the financial base of a country, gear up its development activities and achieve its all-out economic emancipation. Dhaka Stock Exchange has been eminently supportive in many ways in this journey of capital market development in Bangladesh. In this brief span of its existence DSE has played a noteworthy role in the development of capital market in Bangladesh. DSE contribution is enormous in shaping where we stand now and success of DSE in this journey of development of capital market in Bangladesh largely depends on how it run its Trading System.

5.2 Discussion

The stock market is one kind of capital market where the stocks are of the different companies is traded. DSE, floor trading was started with open cry-out auction system. Now trading has become automated, led by the DSE through the central depository. In the present automated trading environment, bids/offers, depth, and required broker particulars are all recorded and can be retrieved for future reference.

Discussion about Types of stock market:

There are two types of stock markets such as

Primary market Secondary market

Primary market of trading system

In primary market the following elements are observed:

Initial public Offer (IPO) B/O Account How to apply for IPO IPO distribution system Refund warrant / allotment of IPO Sell / hold How an NRB apply for IPO What to know before applying for IPO

All of these are discussed below:

Initial public Offer (IPO): Initial public Offer (IPO) means first offering of security by an issuer to the general public.

Opening process of B/O Account:

Collect B/O Account opening form from a depository participant. Fill it up, sign it, enclose to recent color pp size photograph and photocopy of nationality certificate / passport and a certificate from the manager of the bank account. Submit it to the concerned DP along with charges.

The DP will input your data into the online server of CDBL. CDBL server will automatically produce a 16 digit account number like 1525685464653145How to apply for IPO

We will get information from newspaper, stock exchanges, broker offices, web sites of SEC, DSE and the issuers, also from DSE publications.

How to apply

Collect IPO application form from DSE or its broker offices Bankers to the issue. Fill it up, sign it. Submit the form along with the subscription money to the selected bank. Collect the bankers acknowledgement. \ Wait for lottery.

IPO distribution systemSituationsDistribution System

Over- subscribedLottery

Under- subscribedDistributed to the public + under writers(If subscribed by less than 50%, returnto the public)

Subscribed fullyDistribute as supply

Refund Warrant /Allotment of IPO:

If our application is successful in the lottery, the issuer shall deposit your shares in your concerned B/O account. If not successful in the lottery the issuer shall refund your subscription money by account payee Cheque or warrant payable to applicant. Then we have to deposit the refund warrant to your bank for clearance. Thus your money will be returned. So there is no loss in the IPO.

Sell / Hold:

Check the B/O account and take a statement of holdings. Now, one can sell the shares or hold it. If you sell it, get capital Gain, if you hold its price may rise and may get dividend or stocks.

The particulars need to know before applying for IPO:

Profitability, cash flow and financial solvency, if available Estimated profit and cash flow. Companys product is technical one Companys sponsors have good financial track record and are not loan or tax defaulters. Share issue price is as per net asset value and present income based value. Has the company long-term loan from BSB and BSRS? Any foreign investors portfolio in the company.

Secondary market Trading system:

This is well known as stock exchange, is a secondary market a trading market. It is structured to provide liquidity and marketability to the security industry. It is a market where you can buy and sell stocks.

We shall discuss here:

How can I start? What to know before investing? Places to the complaints? How DSE helps you?

Procedure of secondary market trading:

Contact with a stock broker Open a client account and a B/O account Observe first and study the market. Place your buy / sell order. Get buy / sell confirmation. You can hold it or sell it if price increases. If you hold it you may get cash dividend or stock dividend.

Before starting secondary business we should observed-

Fundamental analysis Technical analysis

Fundamental analysis:Fundamental analysis is the process of looking at a business at the basic or fundamental financial level. This type of analysis examines key ratios of a business to determine its financial health and gives you an idea of the value of its stock. Many investors use fundamental analysis alone or in combination with other tools to evaluate stock for investment purposes. The goal is to determine the current worth and more importantly, how the market values the stock.

Technical analysis:

Technical analysis is a method of evaluating stocks by analyzing statistics generated by market activity, past prices and volume. Technical analysis do not attend to major a securitys intrinsic value, instead they look at stock charge for patterns and indicators that will determine a stocks future performance. Technical analysis has become increasingly popular over the past several years, as more and more people believe that the historical performance of a stock is a strong indication of future performance

Current Trading issues of DSE

For smooth trading operation, DSE has installed modern server into the existing:

CDS (Central Depository System) NGTS (Next Generation Trading System)

CDS (Central Depository System)

According to the Bank of International Settlements, A Depository defined as: A facility for holding securities, which enables securities transactions to be processed by book entry. Physical securities can be immobilized by the depository or securities may be dematerialized (so that they exist only as electronic records).

Central Depository Bangladesh Limited (CDBL) was incorporated as a public limited company to operate and maintain the Central Depository System (CDS) of Electronic Book Entry, recording and maintaining securities accounts and registering transfer of securities, changing the ownership without any physical movement or endorsement of certificates and execution of transfer instrument, as well as various other investor services including facilitation of the secondary market trading of Treasury Bills and Government Bonds issues by the Bangladesh Bank.

The Register of Joint Stock Companies (RJC) issued the certificate of incorporation and certification of business commencement to CDBL on 20 August 2000. The Authorized and Paid-up-Capital as Tk 500 million and Tk 300 million respectively with the value of each share is fixed at Tk. 01 million.The objective of establishing CDBL is to provide CDS to add momentum to the growth and acceleration of our capital market. Problems such as fake, forged or lost shares, long settlement cycle, operational inefficiencies of manual clearing and settlement system, hassles of shares registration, transfer and certificate validation are still prevailed in the market and due to them, the investors felt disinclined to stake their money in such a volatile and shaky atmosphere. Under such circumstances, the Depository Act 1999 enabled and motivated the companies in private sector with joint collaboration from the government to set up a securities depository company.

CDBL mainly concerning on the following points:

BO account opening. BO ISIN inquiring & maintenance Dematerialization Settlement Transfer Transmission Dematerializes

NGTS (Next Generation Trading System):

DSE is a forward-looking bourse of the country. Among the major steps and plans, DSE has taken various initiatives to meet the present challenges. For smooth trading operation DSE is now under process of introduce NGTS (Next Generation Trading System) into the existing engine to facilitate Equity market.

5.3 Suggestions for future researchAfter launching the automatic trading system, Dhaka Stock Exchanges major problem has almost been solved. At present, there are no such major problems as was available during the Cry-out system. However, the following are the problems mentionable now faced by the Dhaka Stock Exchange.Physical transfer of SharesThe real problem lies with physical transfer of shares. It has earlier been mentioned that, after automation, Dhaka, Sylhet are connected with Dhaka Stock Exchange and trading occurs at the same time. As a result, shares and securities are required to be sent/to take delivery from that region for settlement. Its really a cumbersome work. Because, at the time of sending security, there attached a 178 form along with that security. The share/security is sent through courier services. Thought there is an insurance policy against the risks of transfer of shares; nevertheless, for avoiding risks, the clearing and Settlement department takes some actions. When they intend to transfer share to any regional office, they separate the 117 form and securities into two parts and putting them in two separate packets, they sent the same through two separate courier services. Reversal, in case of receiving of shares/securities, the said department gets two packets from courier services. One containing 117 forms and another containing shares. Then, they adjunct the respective117 form with respective securities. This is surely a time consuming and difficult job.Index CalculatingAt present, all share price index are used at the Dhaka Stock Exchange. But this is not a proper methodology. By using this methodology of calculating index, appropriate value of index cant be ascertained.Insufficient technical ExpertDhaka stock exchange is functioning with very efficient, skilled and resourceful personnel. As all the systems are going on manually, hence, system department have to work much. In addition, they have or render services to various Broker Workstations to solve the technical problems of the BWS. As a result, more personnel are required for system department to reduce the burden of work. But, they are not getting personnel as per their requirement.Forward Buy/SellThere are some members, who, in fulfilling clients demand, put order for forward buying/selling. It means to buy share without having sufficient fund and to sell share without having securities. This leads to that member firm towards squaring up and as a result, a complex situation arises.

Lack of Knowledge

Like any other industry, people who invest or are involved in capital market activities, have not sufficient knowledge about the market and the product. Even, they dont know how to make a valuation of a share. As a result, they have to suffer losses. What has happened to the capital market in the recent past, have vividly demonstrated lack of knowledge all around thus resulting negative impact in every respect.

Manipulations & Scams

The environment around the capital market is full of rumors of scams and wrong dealings. Brokers are accused of manipulating prices; companies are accused of miss-pricing their stocks, of floating rumors and of misrepresentation of performance. It is impossible to determine the validity of these accusations.

Reference Webside: www.dsebd.org www.wikipedia.org www.google.com www.article.com www.bdstock.com www.stockbangladesh.com

Magazine & Journal paper:

Dhaka Stock Exchange Limited, Monthly magazine, (December 2014) Dhaka Stock Exchange Limited, Monthly magazine, (December 2013) Dhaka Stock Exchange Limited, Monthly magazine, (December 2012) Dhaka Stock Exchange Limited, Monthly magazine, (December 2011) Dhaka Stock Exchange Limited, Monthly magazine, (December 2010) Annual report of Dhaka Stock Exchange Limited (20013-2014)

Books: Hossain, M. F., Siddiquee, M. M., Rahman, M.I., (2006), Dividend Surprise and Market Reaction Evidence from Dhaka Stock Exchange (DSE) Rahman, S., Hossain, M. F., Weak-form Efficiency: Testimony of Dhaka Stock Exchange Akhter, S., Misir, A., Ahmed, S., (2005), Capital Markets Development in Bangladesh: the Status of Dhaka Stock Exchange45Dissertation Report On Evaluate the Trading System of Dhaka Stock Exchange (DSE)Prepared By Md. Mahbub Alam