3.

Overview of Bangladesh capital market

The capital market is the engine of growth for an economy, and 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. While lending by commercial
banks provides valuable initial support for corporate growth, a developed stock-market is an
important pre-requisite for moving into a more mature growth phase with more sophisticated
conglomerates. Despite a challenging political environment and widespread poverty, Bangladesh
has achieved significant milestones on the social development side. With growth 6 percent in
2009-2010, the economy has accelerated to an impressive level. It is noteworthy that the leading
global investment banks, Citi, Goldman Sachs, JP Morgan and Merrill Lynch have all identified
Bangladesh as a key investment opportunity.

It is encouraging to see that the capital market of Bangladesh is growing, albeit at a slower pace
than many would like, with market development still at a nascent stage. Capital market of
Bangladesh has two bourses namely

1. Dhaka Stock Exchange (DSE) and

2. Chittagong Stock Exchange (CSE)

And two over-the counter exchange operated by DSE and CSE. It has one central depository
named Central Depository Bangladesh Limited (CDBL). It provides the facilities for the
settlement of transactions of dematerialized securities in CSE and DSE. To implements rules and
regulations and monitors their implications to operate and develop the capital market it has the
regulator Securities and Exchange Commission.

3.1 Dhaka Stock Exchange:

Dhaka Stock Exchange (Generally known as DSE) is the main stock exchange of Bangladesh. It
incorporated in 1954, and the formal trading of Dhaka Stock Exchange was started in 1956.
Now it is managed under Companies Act, 1994, Security and Exchange Commission Act, 1993
and Security and Exchange Commission Rules, 1987.

DSE
Member 238
Paid up Capital 500000 TK
No. of Listed Securities 473
Equities 229
Mutual Fund 33
Treasury Bonds 200
Corporate Bonds 3
Debentures 8
Market Capitalization (USD bn) $39.14
3.2 Chittagong Stock Exchange:

Chittagong stock exchange was established in 1995 as the second stock exchange of the country.
It is regulated by same rules as the Dhaka stock exchange.

CSE
Member 135
Paid up Capital 2500000 TK
No. of Listed Securities 242
Equities 201
Mutual Fund 33
Treasury Bonds 0
Corporate Bonds 3
Debentures 5
Market Capitalization (USD bn) $32.40

4. Overview of India capital market

Indian Stock Markets are one of the oldest in Asia. India’s first stock exchange Bombay Stock
Exchange (BSE) established in 1875. There are 22 stock exchanges in India among which two are
national and others are regional. The two national stock exchanges are
1. Bombay Stock Exchange (BSE) and
2. National Stock Exchange.
It has central Depository service name Central Depository Services (India) Limited (CDSL) which
was established in 1999. Their market regulator is Securities and Exchange Board of India – (SEBI)
which is managed by professionals.

4.1 National Stock Exchange:

National stock exchange India is the 9 th largest stock exchange in the world by market capitalization
and it is the largest stock exchange in India. It is incorporated in 1992 as a tax-paying company. In
April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act,
1956. NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies
and other financial intermediaries in India but its ownership and management operate as separate
entities. NSE is the third largest Stock Exchange in the world in terms of the number of trades in
equities. It is the second fastest growing stock exchange in the world with a recorded growth of
16.6%.

NSE
Member 1373
No. of Listed Securities 1552
Equities  
$1,514.0
Market Capitalization (USD bn) 0
Market cap to GDP ratio 97.4
*Source: National stock exchange
4.2 Bombay Stock Exchange:
Bombay stock exchange is one of the oldest in Asia. It was incorporated in 1875. It is the 4 th largest in
Asia and 8th largest in the world. It has the largest number of listed company in the world. The
Bombay Stock Exchange has a significant trading volume.

BSE
Member 1862
No. of Listed Securities 5034
Equities 3751
Market Capitalization (USD $1,630.0
bn) 0
Market cap to GDP ratio 100.02

5. Segments in capital market.

Over the period, the Indian securities market has evolved continuously to become one o the most
dynamic, modern, and efficient securities markets in Asia. Today, Indian market confirms to best
international practices and standards both in terms of structure and in terms of operating efficiency.
It has all types of modern financial product to trade freely.

Financial Products Bangladesh India

Equity  
Future and options 
Retail debt market 
Wholesale debt market 
Currency future 
Mutual fund  
Stock lending and Borrowing 

6. Regulation regarding capital market of Bangladesh:

 Company Act 1994
 Securities and exchange commissions ordinance, acts and regulations
 DSE rules and regulations.
7. Regulation regarding capital market of India:

Indian securities markets are mainly governed by a) The Company’s Act 1956, b) the
Securities Contracts (Regulation) Act 1956 (SCRA Act), and c) the Securities and Exchange
Board of India (SEBI) Act, 1992. A brief background of these above regulations are given
below.
 The Companies Act 1956 deals with issue, allotment and transfer of securities and
various aspects relating to company management. It provides norms for disclosures in the
 public issues, regulations for underwriting, and the issues pertaining to use of premium
and discount on various issues.
 SCRA provides regulations for direct and indirect control of stock exchanges with an aim
to prevent undesirable transactions in securities. It provides regulatory jurisdiction to
Central Government over stock exchanges, contracts in securities and listing of securities
on stock exchanges.
 The SEBI Act empowers SEBI to protect the interest of investors in the securities market,
to promote the development of securities market and to regulate the security market.