Welcome to Business Outlook
Related Articles
Covid-19 barred physical movement of officials, making it difficult to execute trading settlements and placing price sensitive information for the DSE and CSE
With Covid-19 restricting physical movement, the stock market regulator and the management of the country’s two bourses are gearing up for automation of its trading platforms and settlement systems.
Officials of the Bangladesh Securities and Exchanges Commission (BSEC) and the Dhaka Stock Exchange (DSE) confirmed this to Dhaka Tribune.
Share trading at the Dhaka and Chittagong stock exchanges were closed for 66 days due to the Covid-19 pandemic.
The importance of full automation of trading, settlements and other official tasks came under the spotlight due to the coronavirus. Covid-19 barred physical movement of officials, making it difficult to execute trading settlements and placing price sensitive information for the DSE and CSE.
After full-fledged automation, these tasks will be done without physical movement and documents would be exchanged electronically, online.
DSE has already formed a seven-member committee headed by its independent director Professor Dr Md Masudur Rahman, to make an assessment report on how to operate automated systems.
The decision was taken at DSE’s directorial board meeting on Thursday, where the committee was also asked to submit their report within 30 days.
Stock exchange officials said the committee would also report on the challenges of executing a full automation plan.
The newly appointed chairman of BSEC, Prof Shibli Rubayat Ul Islam, told Dhaka Tribune that the new commission is giving top priority to capital market automation.
“This process is already underway. The commission hopes to complete the process within six months to a year,” he added.
The country’s bourses remained closed from March 26 to May 30, as the government announced a general holiday to curb the spread of Covid-19.
M Shahriar Azad Bhuiyan, head of internal control and compliance at UniCap Securities Limited, said: “Our trading platforms and settlement systems so far are not fully automated. Merely 5 or 6% of trading has been executed online, whereas the strategic partner of DSE, the Shanghai and Shenzhen Stock Exchanges, have more than 95% online trading.”
In light of the coronavirus pandemic, it is the right time to focus on automation in every sphere of the trading platform as well as the settlement system, he added.
Other stakeholders said the DSE has a 100% real-time trading platform, Flex-Trade, which allows real-time trading from mobile, laptop, or desktop from anywhere in the world since 1998.
However, even after 22 years of automation, the DSE has failed to create an integrated and unified automated system, they lamented.
Trading right entitlement certificate (TREC) holders and listed companies still exchange price sensitive information and other necessary information with stock exchanges manually.
Additionally, somebody has to be physically present to operate workstations at brokerage houses for trading settlements. Investors have to confirm manually whether money is transferred to a bank account when shares are bought or sold.
Dhaka Chamber of Commerce and Industry (DCCI) President Shams Mahmud said the DSE and the Chittagong Stock Exchange (CSE) remained shut due to the impact of the pandemic for almost two months. The prolonged closure has hurt the image of the market and affected both foreign and local investor confidence in the long run.
DSE director Shakil Rizvi also said the stock market remained shut for 66 days as it was not fully digitalized.
“There are a number of challenges including current rules for developing a digitalized capital market. Now we are seriously working on this issue,” he added.
CSE chairman Asif Ibrahim said they were also in the process of automating their bourse.
“We are looking at how international stock markets operate and will take lessons from their methods of digital operations,” he added.
(DT)
