Chapter 1: Introduction

Stock Market plays a vital role of an economy. Without efficient stock market, rapid economic
development could be hampered stock market provides long term funds to entrepreneurs. Stock
Market of Bangladesh is still highly speculative and lacks transparency due to poor regulatory
framework. In Bangladesh, Financial sector was historically driven by banks and stock market
had fewer rules to play as people had mixed perception about the risk pattern in stock market
that discouraged them mostly to invest there. But in the mid of ninetieths of last century stock
market started to show vibrant behavior that make people interested about the stock exchanges.
As the index was rising sharply and everyone was making money, many people started to invest
their money to the heated market that made a bigger bubble and finally the bubble bursts.
Benchmark index came down to 700 point in November 1997 from its highest 3600 point in
November 1996. Thousands of investors lost their money that made them reluctant to invest in
the capital market again. It took one decade for them to forget the history of collapse.

After that, regulators had taken many steps to stabilize the market. Hundreds of new issues
came to the market. Central depository, circuit breaker, online trading, etc. were introduced in
the market to attract investors. As a result, the market started to grow again. This time most
investors were new and young with little knowledge about stocks and did not care about market
risk. They invested their money and finally lost everything when the bubble started to burst in
December, 2010 that had started to grow from the year 2009. This time Benchmark index came
down to 4600 points in early July 2015 from its highest point 8918 in December 2010. Millions
of investors lost their money and came down to the street. This is the small picture of stock
market crashes in Bangladesh. In both cases regulators had failed to take proactive measures to
not grow the bubble and caused losses for millions of investors when the bubbles burst.
However, up to May 2017, DSE and CSE experienced a number of positive signs in higher
index turnover and they both are in ups and down situation. As such volatility affects mass
people (many investors), it is essential to try to minimize such volatility by identifying the
causes (esp., Regulatory failure) and solving the problems.

1
 Chapter 2: Literature Review

Stock market plays an important role in the financing of firms’ investments and operations (Goldstein
et al., 2017). A developed stock market opens an additional window for both the government and
private investors to accumulate resources for their long-term investments, in addition to existing
financial sources such as taxes, banks and stock markets (Mortaza and Shadat, 2016). In their study
they have also argued that the absence of well-developed stock markets is a major impediment to
efficient public-sector resource mobilization and private sector development, particularly for
building major infrastructure projects.
In addition, corporate bond market provides a secure source of financing to enterprises and allows
them to grow and innovate, helping to reduce overreliance on commercial banks whose lending
capacity is at times stressed (ICMA, 2013). On the related issue, Herring and Chatusripitak (2000)
considered the consequences of not having a well-functioning bond market and its implications for
savers, investors and banks. In another study, Jiang, et al., (2001) discovered the principal benefits
of a well-developed corporate bond market and ensures it as an effective and efficient alternative
source of financing to bank financing. Misir, M. Abu et al., (2010) have examined that stock market
is one of the diversification of a country’s financial sector and it also reduces foreign currency risk.
On the other hand, Jahur and Quadir, (2010) have also recognized in their research that stock market
acts as buffer of equity market. However, Hyun and Jang (2008) assert that, for most countries in
Asia, the bon stock market is still in an infant state, is very small in size and is therefore not capable
of bearing the burden of a developed market.
However, the stock market in Bangladesh is still in its infancy. On the other hand, the corporate bond
issues had been very occasional and had been stagnant due to a lack of varied corporate debt supply.
To examine the corporate stock market scenario in Bangladesh it is revealed that corporate stock
market of the country is not an efficient one and they have also pointed investors’ unawareness about
the security. Moreover, Mister and Hossain (2012) have also explored the market as very weak due
to problems in the political, macroeconomic and financial system. Whereas, an efficient bond market
is important for managing public debt and bank liquidity and for efficient conduct of the monetary
policy (Jahur and Quadir, 2010).
The development of capital markets in Bangladesh should be prioritized to enrich the corporate bond
market development. Without circulation of stock market, the monetary policy measures would be
hindered, and the desired impact on the real economy cannot be fulfilled. However, the present study
has been undertaken to identify prospects and put essential prerequisites to the development of
corporate bond market in Bangladesh.

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 Chapter 3: Stock Market in Bangladesh

3.1 History of Stock Market in Bangladesh

The inception of Bangladesh stock market started on April 28, 1954 as East Pakistan Stock
Exchange Association Ltd. At that time Pakistan ruled Bangladesh and the name of the country
was East Pakistan. Other than trading on this market started in 1956 with a total paid up capital
of Taka 4 billion and 196 securities were listed on this market. Besides, the exchange was
renamed as Dhaka Stock Exchange (DSE) Limited on June 23, 1962. On the other hand, trading
on Dhaka Stock Exchange was suspended from 1971 to 1976 because of liberation war and its
pos independence weak economy. In 1976, the trading was started again with 9 listed securities
having a total paid up capital of Taka 137.52 million.
However, in the history of the stock market of Bangladesh there were two crashed occured,
first in 1996 and then in 2010-2011. At first, the market crashed in December of 1996 and the
index started to decline significantly since then resulting in a cumulative decline of 83.44
percent from 1996 to 1999 with the annual rate of 27.82 percent. Stock index of Bangladesh,
which has dropped 55% since early 2011, continues to fall. One of the main reasons behind
this unstable stock market is the lacuna in the regulatory frameworks and weakness in stock
market governance. In this situation, sustainable improvement of the legal framework of the
stock market stock market is a vital issue for the protection of the investors and the development
of its economy.

3.2 Stock Market in Bangladesh

A stock exchange, securities exchange or bourse is a facility where stockbrokers and traders can buy
and sell securities, such as shares of stock and bonds and other financial instruments. Stock
exchanges may also provide facilities for the issue and redemption of such securities and instruments
and capital events including the payment of income and dividends. Needed Securities traded on a
stock exchange include stock issued by listed companies, unit trusts, derivatives, pooled investment
products and bonds. Stock exchanges often function as "continuous auction" markets with buyers
and sellers consummating transactions via open outcry at a central location such as the floor of the
exchange or by using an electronic trading platform.

3
The stock market of Bangladesh consists of the following two markets:

3.2.1 Dhaka Stock Exchange

Dhaka Stock Exchange is the first & biggest stock exchange of Bangladesh. It is is located in
Motijheel, Dhaka. In 2015, the combined market capitalisation of listed companies on the
Dhaka bourse stood at over $40 billion.
The business of Dhaka Stock Exchange started on May 14, 1964 after renaming East Pakistan
Stock Exchange Limited. Dhaka Stock Exchange (DSE) is registered as a Public Limited
Company and its actions are regulated by its Articles of Association rules & regulations and
bye-laws along with the Securities and Exchange Ordinance - 1969, Companies Act - 1994 &

In the beginning it was a physical stock exchange and used to buy and sell
in the open out-cry system. After that automated trading system was
introduced to secure smooth, timeliness & effective operation on the
market. Moreover, the system was installed on 10th August, 1998 and was advanced time to
time. The latest upgrading was done on 21st December, 2008.
On the other hand, the members in Dhaka Stock Exchange are 250 and total 533 listed
securities. The working days of DSE is 5 days in a week without Saturday, Sunday public
holidays & other government holidays. The trading time is from 11:00 am to 15:00 pm (local
time). Investment options for an investor in this market are ordinary share, Debenture, Bond &
Mutual funds.
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).
 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.
 Monitoring the activities of listed companies (As per Listing Regulations).
 Investors’ grievance Cell (Disposal of complaint by laws 1997).
 Announcement of Price sensitive or other information about listed
companies through online

4
3.2.2 Chittagong Stock Exchange
The Second stock exchange of Bangladesh is Chittagong Stock Exchange. As it introduces
modern technology & sophisticated logistic support, it is said that CSE is the pioneer of the
modern capital market of the country. Besides, it was incorporated as a self-regulated non-
profit organization on 1st April, 1995 and formally opened on November 4, 1995. Though
itstarted its trading through cry-out system but after that Chittagong Stock Exchange started
first automated trading bourse of the country. CSE started its automated trading on 2nd June,
Moreover, there are four different markets in CSE same as DSE
which are public, Spot, Block & Odd Lot market. In addition, trading
is done through all these four markets. The Five categories of
company listed in CSE are A, B, N, G and Z but in G category there
is not any company.
Chittagong Stock Exchange has its own indices to calculate movements of its total market
value. CSE maintained only one index that was All Share Price Index until 10th October, 1995.
Now CSE has 3 indices in the stock exchange those are All Share Price Index (CASPI), CSE
Selective Index (CSE30) and CSE Selective Categories' Index (CSCX).

3.3 Regulatory Authority of Stock Market

Bangladesh Securities and Exchange Commission is the regulatory authority of stock market
in Bangladesh. Before it is known as Securities and Exchange Commission (SEC) and it was
established on 8th June, 1993 under the Securities and Exchange Commission Act, 1993. The
Chairman and Members of the Commission are appointed by the government and have overall
responsibility to administer securities legislation. The Commission is a statutory body and
attached to the Ministry of Finance. However, SEC was renamed to BSEC (Bangladesh
Securities Exchange Commission) in 2013.

Commissions’ Main Functions:

 Regulating the business of the Stock Exchanges or any other securities market.
 Registering and regulating the business of stock-brokers, sub-brokers, share transfer
agents, merchant bankers and managers of issues, trustee of trust deeds, registrar of
an issue, underwriters, portfolio managers, investment advisers and other
intermediaries in the securities market
 Registering, monitoring and regulating of collective investment scheme including
all Forms of mutual funds.

5
 Monitoring and regulating all authorized self-regulatory organizations in the
securities market.
 Prohibiting fraudulent and unfair trade practices relating to security bestriding in
any securities market.
 Promoting investors’ education and providing training for intermediaries of the
security market
 Prohibiting insider trading in securities
 Regulating the substantial acquisition of shares and take-over of companies
 Undertaking investigation and inspection, inquiries and audit of any issuer or dealer
of securities, the Stock Exchanges and intermediaries and any self –regulatory
organization in the securities market
 Conducting research and publishing information.

6
 Chapter 4: Two major crashes of Stock Market of Bangladesh

4.1 What is stock market crash?

A stock market crash is a sudden dramatic fall of stock prices across a significant cross-section
of a stock market, resulting in a significant loss of paper assets. Crashes are driven by panic as
much as by underlying economic factors. They often follow speculative stock market bubbles.
Stock market crashes are social phenomena where external economic events combine with
crowd behavior and psychology in a positive feedback loop where selling by some market
participants drives more market participants to sell. Generally speaking, crashes usually occur
under the following conditions, a prolonged period of rising stock prices and excessive
economic optimism, a market where P/E ratios exceed long-term averages, and extensive use
of margin debt and leverage by market participants
The capital market of Bangladesh had two major debacles which occurred in 1996 and 2010-
11, creating some bad impacts upon the country’s total capital market.

4.2 Crash during 1996

The scenario of stock market crash in 1996 was totally different. The number of BO account
holders was only 300,000 and most of them were very new in the market. During the crash of
1996 paper shares used to be sold in front of DSE and it was not easy for investors to identify
fake and original shares. There was no automated trading sys-tem, surveillance was not enough
strong and no circuit breakers as well as international protections.
From 1991 to the end of 1995 DGEN price index gained by 139.3% and reached to 834 point.
But in 1996 the market experienced dramatic change and pushed the price index up by 337%.
DGEN Index recorded high growth from July and stood at 3648.7 points or by 280.5% on 5th
November 1996.
During the ‘Bull Run’ period new records were posted almost every day in both bourses for
example market capitalization achieved to $2 billion which is equal to 20% of total GDP.
Finally, abnormal rise of share prices started to fall and Bangladesh stock market experienced
its first crash of the history in 1996. The index lost over 233 points on Nov 6, 1996. After the
bubble burst DGEN index dropped to its lowest point and stood at 957 in April 1997. It stood
at around the same point where it was 10 months before and DSE General Price index lost
almost 70 percent from its highest point of November 1996.

7
 In 1996, Index
starting with a base
of 350 points, the
share price index of
the DSE rose, the
index of the DSE
soared from 1,000
in June to 3,648.75
points on November 5, 1996 before the market crashed. Then it started falling and it came down to
462 points in May 1999.

4.2.1 Reasons of the 1996 crash

 Manipulation
Some foreign portfolio, 28 managers, few brokers and sponsors of few listed companies were
behind the stock price manipulation in October 1996. As a result all share price index of DSE
dramatically sky rocketed to 3600 point from 1000 point in six months’ time. Few foreign &
local investors that had inside information made huge profit and a lot of general investors paid
heavily.
 Demand Supply mismatch
The failure of market regulators was one of the causes of stock market crash in 1996. Stock
exchanges did not take any action against the dramatic price in-crease of listed securities during
June to November 1996. Bubble formed due to abnormal demand of securities by new investors
where the numbers of listed securities were very few. The reason of huge influx of investors
was political stability in the country and bringing confidence in investor`s mind.
 Defective (DVP) system
The delivery versus payment (DVP) system of trading used to allow buyer-seller to settle their
transactions between them without stock exchange participation. Many brokers/dealers used it
as a tool to show fake trading to increase demand of share from the general investor’s side.
According to Bangladesh Bank analysis that there was an unauthorized curb market consisting
of over 25,000 investors outside the stock exchange where securities were traded at a very high
price. Weak regulations and surveillances by SEC could not monitor market manipulators and
market intermediaries. Even information inefficiency, artificial financial statements certified
by chartered accountants, false information and rumor were other important factors that
overheated the market and burst the bubble.

8
4.3 Crash during 2010
The market crash of 2010 drew greater degree of attention because much larger segments of
population spreading all around the country are affected this time as the market in this period
has gained significant growth. The securities market debacle in 2010 need to be viewed from
different perspectives. This is a plain logical analysis supported by some facts and figure. The
analysis covered the period from 2004 till 2010 because, the impacts of 1996 continued until
2003 period. It can be considered that, the market started consolidation and development from
2004.
In 2010-11 market crash, when again Awami League government was in power. The Awami
League led alliance government to power in January 2009, the general index of the DSE stood
at 2,726 points. Before the crash began, the general index had soared in 29 trading days from
7,522 points on October 20 to 8,918.51 points on December 5.

In 2010-11, stock market

was computerized and
investor around 33+ lacs
who was traded electrical
share computerized
software. The company
have historical data,
annual report, grape of price which recorded by computer program. There are so many
companies, big investors; Finance Institute and Bank was involved in market crash 2010-11.
Like Beximco, Aftab Auto, CVO-PLT and CMC Kamal, IDLC, Prime finance, PLFSL, NBL
and South east Bank etc.

9
Beximco ,Aftab Auto, CVO-PTL and CMC Kamal:
2009 2010 2011
EPS Price Range EPS Price Range EPS Price Range
Lowest Highest Lowest Highest Lowest Highest
BEXMCO 3.46 30 95 4.20 92 160 2.10 50 155
Aftab 3.19 20 110 19.61 95 310 16.15 93 240
Auto
Chittagong (24.4) 1.90 9.7 2.1 8.30 446 4.50 129.40 295.2
Vegetable
(CVO)
CMC 1.01 1.20 7.30 1.92 3.30 68.50 1.42 22.10 68.90
Kamal
*EPS Calculate by according to face value of share TK 10

Beximco is one of them company that was involved in market crash 2010-11. In 2009 Beximco
EPS was 3.46, price TK 30 in January and December was TK 90. In January 2010 price was
TK 92 and then its goes up TK 160 at December 2010 before crash start, 2010 EPS was 4.20.
Then its fall quickly and reached TK 50 at 2011.EPS growth (4.20-3.46=0.74) but Price Rise
TK 30 to 160. That was the reason for Big Fall.
In 2009 Aftab Auto EPS was 3.19, price TK 20 in January and December was TK 97. In January
2010 price was TK 95 and then its goes up TK 310 at December 2010 before market crash start,
while EPS was 19.61. Then its fall quickly and reached TK 93 at 2011.
In 2009 Chittagong Vegetable (CVO-PTL) EPS was (–24.38), January price was only TK 1.9
and December was TK 9.7. January 2010 price was TK 8.30 and then its goes up TK 446 at
December 2010 before market crash start. 2010 EPS was 2.10. Then its fall quickly and reached
TK 93 at 2011.
In 2009 CMC Kamal EPS was 1.01, January price was only TK 1.20 and December was TK
7.30. Then January 2010 price was TK 3.30 and then its goes up TK 68.50 at December 2010
before market crash start. 2010 EPS was 1.92. Then its fall quickly and reached TK 93 at 2011.
EPS growth (1.92-1.01=0.91), but Price Rise TK 1.20 to 68.50. That was the reason for Big
Fall.

10
4.3.1 Reasons of stock market crash in 2010-2011
 Increase of listed securities
The fundamental strength of the market essentially comes from financial strength of the listed
companies. The market witnessed that last few years many fundamental companies with strong
financial strength have been listed in the market. From the graph, it is seen that number of
security listing are increasing year to year and highest amount is in the year 2011. But growth
of market demand for stock was much then that of supply that inflated the market in recent
years and made the market most volatile one in the region.
 Direct listing
With the approval of SEC few companies have been directly listed in the stock exchange. These
companies come to the market with inflated share prices.
 Faulty listing methods
In the year 2010, regulator introduced Book building method to attract new companies to the
market. Some companies abused this opportunity to exploit maximum benefits from listing that
inflated the market. SEC allows companies to float securities through IPO (Fixed Price and
Book Building method), Direct Listing and Repeat IPO where Book building method is used
mostly in the year 2010.
 Demutualization of Exchanges
The executive board of both DSE and CSE is formed with members both elected and
nominated. The elected members mostly come from a pool of big investors. Due to the less
interest and relation of nominated members, these elected members run the administration.
Consequently, the players of the capital market act as controller. It has been found that, during
the period of market manipulation, controllers are inactive because of conflicting interest. In
the investigation report it has been pointed out that, different stakeholders of capital market
support demutualization of exchanges which is the process of converting exchanges from non-
profit, member owned organization to for-profit, investor owned corporation.
 Investment of bank in the capital market
In 2010 & 11 banks and financial institutions invested huge amount of deposit money in the
stock market. As a result share prices sky rocketed until December 2010. When Bangladesh
Bank restricted more than 10 percent investment of deposited money, increased CRR and SLR
ratio, created liquidity crisis and market crashed.
 Uniform Face Value of Shares
In 2009 & 2010, 62 listed companies spilt their shares to make a uniform face value of share at
Tk. 10. In theory, splitting shares doesn’t intend to change revenue or asset and thus should not

11
affect share prices. However, as splitting shares make it possible for small investors to buy
those shares which were previously expensive, small investors showed a lot of enthusiasm
to buy split shares and consequently pushed the price up. This began to transform market
capitalization. The companies which had split their shares witnessed 655% increased market
capitalization. On the contrary, companies which did not split their shares noticed only 46%
rise in market capitalization.
 Increase of BO a/c
Most of the BO accounts were opened during June ’2009 to January ’2011 that indicated that
more than half of the investors could be treated as new investors. During 2009, stock exchanges,
Institutional investors and SEC make many campaigns within and outside the country to attract
new investor that seems to be successful as the BO accountholders was doubled in last two
years that might be treated as a potential for market development. But due to scarcity of new
securities market price increased substantially. This demand-supply mismatch along with
inadequate investor’s knowledge made the stock prices in a new height and finally turned into
a big depression that is still going on.
 Fluctuation of DGEN
In December 2010, DSE index had crossed 8500 points. The market had called bullish during
this period. After this period, the market became bearish. The exchange lost 1800 point
between, December 2010 and January 2011. In January 2011, the General Price Index (DGEN)
fall 660 points. Again that during December 2011 to January 2012 Dhaka Stock Exchange
general Index (DGEN) felled by more than 50% during that period, i.e., DGEN lose its value
by 50% during the period that says that this is not simple volatility and it can be defined as a
collapse.
 Stock price Manipulation
Stock price manipulation was very common in last few years as some company’s stock price
grew by more than 4000% in one year without any significant change in company
fundamentals. Stock price was inflated with the help of serial trading by few numbers of big
investors that was one of the reasons of recent collapse of stock market in Bangladesh.
 Pre-IPO & IPO process
Investigation committee considered that due to Pre-IPO & IPO manipulation share prices sky
rocketed and that is the main reason for the share market crash. Manipulators illegally &
unethically created a Curb market in Pre-IPO stage. Without recommendation by the listing
committee application for IPO was accepted. SEC did not examine abnormal asset revaluation
and indicative price. As a result in Pre-IPO or IPO stage placement process and placement trade

12
Curb market overvalued share prices. This eventually generated liquidity crisis in the capital
market.
 Asset revaluation & Rumor
By taking chance of weak asset revaluation method companies have overvalued their asset. In
this process dishonest auditors generated artificial audit reports. So, calculating of NAV on
overvalued asset indicates wrong signal. Some companies issued Bonus shares against
unrealized gain of revalued asset price which is a faulty accounting practice.

13
 Chapter 5: Problems of Stock Markets in Bangladesh

There are some problems of stock market in Bangladesh. These problems are given below-
 Small Number of Market Listing
Another problem of Dhaka Stock Exchange is small number of market listing. The number of
listed companies has grown from 522 to 750 in 2016 with an average annual growth rate of
6.16 percent. There are small number of treasury bonds of total listed companies that are
actually inactive in the market. This indicates poor listing in the market.
 Lack of Professional Standards for Licensing
The categories of market participants requiring a license from the BSEC include (i) brokers,
who provide trading services to clients; (ii) dealers, who are permitted to trade for their own
account; (iii) merchant bankers, who provide underwriting, issue management, and portfolio
investment services; (iv)investment advisors, who provide investment advice to clients.
Another problem of Dhaka Stock Exchange is small number of market listing. The number of
listed companies has grown from 522 to 750 in 2016 with an average annual growth rate of
6.16 percent. There are small number of treasury bonds of total listed companies that are
actually inactive in the market. This indicates poor listing in the market.
 Inadequate Systems and Surveillance
The trading and surveillance systems and standards are inadequate. Good governance depends
on having sound technical infrastructure in place, but neither the BSEC nor the exchange has
effective automated systems of surveillance to help them detect market abuse.
 Absence of Demutualization and Strong Corporate Governance
Some members being the directors of DSE, CSE look for their own interest using their internal
information of share market. As a result, there have been calls for the demutualization of the
stock exchanges and also merging of the exchanges to remove inherent conflicts of interest,
eliminate opportunities for arbitrage between the exchanges, and enhance liquidity and public
trust. The listed companies are also partly responsible for the poor performance of the two stock
exchanges.
 Shortage of Fundamental Securities
The limited number of listed securities has constrained increases in the liquidity and market
capitalization of the stock exchanges. In addition, investors have restricted investment choices
because of the lack of fundamental equity issues, investment-grade equities, and debt
instruments in the market.

14
Here are some other problems:
 Little knowledge of retail investors
Most of the retail investors in Bangladesh have a very little knowledge about stock market.
Most of them take their investment decision based on rumor. Since stock market is not a
place of gambling, rather it is a place of knowledge-based game. So many of them behave
irrationally in the market.
 Valuation Disparity
Value of stocks is subject to speculative trading rather than sound fundamentals, resulting
in market volatility.
 Price manipulation
It has been observed that the share values of some profitable companies has been increased
fictitiously some items that hampers the smooth operation of Stock market.
 Improper Financial Statement
Many companies did not focus real position of the company as some audit firms involve in
corruption while preparing financial statements. As a result, the shareholders as well as
investors do not have clear perception about position of that company.
 Delays in Settlement
Financing procedures and delivery of securities sometimes take an unusual long time for
which the money is blocked from nothing.
 Lack of Professional Portfolio Management
The institutional investors bring stability through non-speculative long-term investments.
However, the ratio of institutional-to- retail investors remains low.
 Information Asymmetry
The access to credible information is strictly restricted for general investors. Most of the
retail investors are forced to look to brokers for advice that may consist of market rumors.
 Regulations in Dividends
Some companies do not hold Annual General Meeting (AGM) to declare dividends on a
regular basis that confused the shareholders about the financial positions of the company

15
 Chapter 6: Findings and Recommendations

6.1 Findings
The followings are some findings that are_
 Investors are influenced by other investors’ decisions.
 Individual investors invest most of their investment in the stock market without any
research.
 Investors most of the time take decisions based on the rumor.
 They want to grab short term profit rather long term profit.
 Most of the investors think, behind the market there are some people who manipulate
the market.
 Some people are giving false information so that they can take some advantages.
 Regulator bodies are failing to control the false information.

6.2 Recommendations
 To introduce automated monitoring system that may control price manipulation,
malpractices and insights trading.
 To introduce full computerized system for settlement of transaction.
 To take remedial action against the issuer of fake certificates.
 The broker should not be allowed to deal in the Scripps on their own account.
 To make arrangement to set up merchant banks, investment banks and floatation of
more mutual funds particularly in the private sector.
 to demutualize of Stock Exchanges.
 To ensure the Market Surveillance Systems.
 Ensuring Integrity and Efficiency of BSEC Members and Staffs.
 To ensure consistency in Regulation.
 To ensure transparency in listing procedure.

16
 Chapter 7: Conclusion

The capital market is the mechanism of growth for the economic development of a country like
Bangladesh. It performs a critical role in acting as an intermediary between savers and
companies seeking additional financing for business expansion. Vibrant capital is likely to
support a robust economy. Though there are two major crash occurred in 1996 and 2010-2011,
because some lackings of law and regulation of Security and Exchange Commission as well as
the government. In order to make stock market perfect and efficient the BSEC, DSE, CSE and
all market players should work together with the support of the government. Bangladesh should
really focus on improving governance and developing advanced market products, such as
derivatives, swaps etc. It is necessary to reform the legal frameworks to support financial
development and to protect the investors. Strong framework rules should be framed to restore
the investors’ confidence. Flexible legal frameworks must be adopted. The regulators must
cope with continuously to the changed global economy

17
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