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  • 7/30/2019 Stock Markets in Bangladesh

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

    Md.Yousuf Chowdhury

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

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

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

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

    exchange (CSE).

    The stock exchange is asecondary market, tradingmarket. And

    Chittagong

    Stock

    Exchange.

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

    1

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

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

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

    Md.Yousuf Chowdhury

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

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

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

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

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

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

    raise capital and accelerate industrialgrowth for overall benefit of theeconomy.

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

    pace with the global advancements.

    Missions

    Chittagong

    Stock

    Exchange.

    ABOUT CSE

    Background

    Vision:

    The visions of CSE are as follows:

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

    c) To develop a corporate culture through mandatory corporate membership

    d) To develop a transparent market ensuring investors interest

    2

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

    Md.Yousuf Chowdhury

    Chittagong

    Stock

    Exchange.

    e) To expand the capital market

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

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

    easy, accurate and easily accessible to all transactions

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

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

    j) To attract the investors for getting membership of SEC

    k) To ensure smooth customer service and truncation

    l) To achieve goodwill

    m) Total necessary steps for increasing customers.

    3

    Objectives

    Develop a strong platform for entrepreneurs raising

    capital;

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

    transactions and easily accessible to all;

    Undertake any business relating to the Stock Exchange,

    such as a clearing house, securities depository center or

    similar activities;

    Develop a professional service culture through

    mandatory corporate membership;

    Provide an investment opportunity for small and large

    investors;

    Attract non-resident Ban ladeshis to invest in

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

    Md.Yousuf Chowdhury

    BOARDS OF DIRECTORS

    Legal base of CSE

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

    limited company. All of its 129 members are

    corporate bodies. It has a separate secretariat

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

    directors with equal proportion to ensure thetransparency.

    The Board constituted Committees to delegate

    such functions and authority as it may deem

    fit. There is an independent secretariat headed

    by a full time Chief Executive Officer. CSE

    activities are regulated by its own regulations

    and bye laws along with the rules, orders and

    notification of the SEC.

    Chittagong

    Stock

    Exchange.

    4

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

    -elected

    1 Mr. MKM Mohiuddin President Elected

    2 Mr. Nasiruddin Ahmed Chowdhury Vice -President Elected

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

    5 Mr. Abu Sayed Md. Shahidullah Director Elected

    6 Mr. Al Maruf Khan Director Elected

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

    9 Mr. M. Salman Ispahani Director Elected

    10 Mr. Murshed Murad Ibrahim Director Elected

    11 Mr. Syed Mahmudul Huq Director Elected

    12 Mr. Tareq Kamal Director Elected

    13 Dr. A. Majeed Khan Director Non-Elected

    14 Prof. Abu Ahmed Director Non-Elected

    15 Engr. Ali Ahmed Director Non-Elected

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

    19 Mr. Mamun Rashid Director Non-Elected

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

    21 Prof. Rabiul Husain Director Non-Elected

    22 Mr. Mohd. Safwan Choudhury Director Non-Elected

    23 Mr. Waliur Rahman Bhuiyan Director Non-Elected

    24 Mrs. Yasmeen Murshed Director Non-Elected

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

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

    Md.Yousuf Chowdhury

    The CSE Board of Directors is

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

    Commission nominates 12. TheBoard elects its own President

    and 3 Vice- Presidents. TheChief Executive Officer of CSE

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

    policies and supervise theExchange's operations:

    MANAGEMENT TEAM

    Chief Executive Officer: The CEO is responsible for