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Five bodies, including the Bangladesh Bank and the Bangladesh Securities and Exchange Commission, have reached an agreement to facilitate the trading of government treasury bonds on the Dhaka Stock Exchange smoothly.
The BB, the BSEC, the Dhaka Stock Exchange, the Chittagong Stock Exchange and the Central Depository of Bangladesh signed a memorandum of understanding in the past week regarding the matter.
Now, there are 221 treasury bonds with tenure ranging from 5-20 years listed on the DSE.
Government bonds are traded between institutional shareholders, including banks and financial institutions.
The general investors would be able to invest in the government securities easily once the trading of the government securities on the DSE begins.
DSE chief operating officer Shaifur Rahman Mazumder told New Age that a MoU was signed among the bodies to ensure smooth and uninterrupted trading of treasury bonds on the DSE platform.
The five bodies have separate functions in the trading operation of the treasury bills and each body would play its role in the operation as per a consensus reached previously, he said.
Shaifur also said that the five bodies agreed to coordinate to provide maximum possible services to the investors.
‘We hope that the trading of all treasury bonds will begin this month after finishing the remaining work with a software upgrade,’ he said.
The vendor is working to prepare a specialised debt board which would have some unique features necessary for debt securities, Shaifur said.
He said the debt securities have coupon rate or interest rate for the investors.
So, the board would show yield of each of the securities, he added.
On October 14, 2021, the DSE successfully experimented the first trading of a treasury bond using its trading system after 16 years.
The settlement of the transaction was completed through the Central Depository Bangladesh Limited.
A transaction of a 10-year Bangladesh Treasury Bond was executed as a test case between VIPB Accelerated Income Unit Fund and Alliance MTB Unit Fund through City Brokerage Limited and MTB Securities.
The government bonds are risk-free and are suitable for investors who are risk averse or unable to take financial risks due to their age or other factors, market experts said.
The bonds are also suitable for inexperienced investors who are unable to assess risks of financial products such as corporate bonds and common stocks, they said.
Currently, an investor has to open a business partner identification number (BP ID) through any bank in the country and the bank opens a BP ID for the investor through the BB in MI Module.
Investors then will select suitable bonds and request his/her bank to buy the available one following depositing fund to his/her bank account.
After that, the bank buys bonds on behalf of its client from the secondary market and the bank collects coupon periodically or matured amount and deposits it to the client’s account.
Stocks investors will not need to open the BP ID as they would be allowed to trade through their BO accounts under the new system.
They will buy or sell bonds through their respective brokerage houses.
The BB will collect list of the bonds periodically to send coupon to the investors’ respective bank accounts.
Investors can also trade treasury bonds through current Market Infrastructure Module of the central bank.
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