BSEC Encourages Brokerages to Issue IPOs

BSEC (Bangladesh Securities and Exchange Commission) is reportedly planning to allow brokerage firms to list on the stock exchange so that they can use the proceeds to enhance their capabilities to prevent misconduct in the capital market.

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According to BSEC commissioner Shaikh Shamsuddin Ahmed, stockbrokers that are allowed to issue IPOs will be able to increase investment flows to the market and also enhance their monitoring practices.

BSEC plans to target brokerages that are subsidiaries of banks that have better business performance. It will encourage them to issue IPOs representing at least 51 percent of their paid up capital, thereby turning them into associate companies rather than subsidiaries of banks.

In Bangladesh, the investment activities of banks' associate companies are excluded from a bank's capital market investment exposure, thereby freeing up funds to for stock market investment.

Currently there are 242 brokerage firms in Bangladesh, the large majority of which do not currently fulfill BSEC's IPO requirements.

BSEC is currently only processing three IPO applications, after having approved just one IPO in the past five months.