Stock Markets in Bangladesh
Transcript of Stock Markets in Bangladesh
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
The primary market is where capital is actually raised by thecompany selling stock to investors. Company in a separate arena fromthe stock market performs the capital raising function. The stockexchange is a trading vehicle place where buyers and sellers arebrought together. All profits and losses go directly to the investors, lesscommissions and fees. The stock market is structured t provideliquidity and marketability to the securities industry. It is a worldwidesystem designed to bring buyers and sellers together. Companyowners and stockholders, whether part of management, venturecapitalists or investors, need a way of turning their stock certificatesback into cash. The stock market provides this opportunity. It is thiskind of liquidity that makes investing in stocks attractive. Stock pricesare set by supply and demand. It is an auction market, whereinvestors, through their intermediaries-brokers bid for stock at a price
they feel is fair at the time. The market provides a ready market forstocks. With a simple phone call, an investor can buy or sell stock,virtually in minutes.
A nationwide user-friendlycentral depository system (CDS)has also been brought into. AtCSEs taking the first stem,securities and exchangecommissions of Bangladesh hasformed a committee to developan appropriate legal framework
for the central depositorysystem. Considering theimportant role of CSE on thedevelopment of capital market ofBangladesh, an attempt has beenfabricated in this paper to studythe simultaneous practices ofstock trading in Chittagong byCSE. Although various researchworker had been fabricatedabout various topics of CSE, avery few have been taken toanalyze the overall operationalaccomplishment and theprofitability of Chittagong stock
exchange (CSE).
The stock exchange is asecondary market, tradingmarket. And
Chittagong
Stock
Exchange.
A S H O R T NOT E ON S TOCK MARKE T
1
The stock market is an essential part of capital market. The economyof a country largely relies on a strong capital market supported by avibrant stock market. Contribution of any stock exchange generallyleads to the economic growth by stimulating the funds to financeindustry and other enterprises and changing the savings to industriesand other productive activities. The existence of a stock markefacilitates listed companies to raise additional capital quickly andcheaply as they enjoy reputation. Bangladesh emerged as anindependent country in the year 1971. But till now, the industriadevelopment of Bangladesh is still insolvent and for swifindustrialization, formation of capital is the most significantcomponent. But it is easy to procure through capital market withproper support of stock market. Bangladesh stock market has seen arapid growth in the recent years. Initial public offerings (IPO) areincreasing and foreigners are also increasingly showing interesresponding to the governmental policies and development in the stockexchanges. At present, their are two stock exchanges, in both theexchanges, trading is done through automation system- a newtechnologically developed system for stock trading. By introducing thissystem, both the exchanges increased their role in the overaldevelopment of capital market or the country. The Chittagong stock
exchange (CSE) has been established in 1995 as model of internationastandard. A complete automation project of CSE is on full sway.
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The Chittagong Stock Exchange (CSE)began its journey in 10th October of
1995 from Chittagong City through thecry-out trading system with thepromise to create a state-of-the artbourse in the country.
Founder members of the proposed ChittagongStock Exchange approached the BangladeshGovernment in January 1995 and obtained thepermission of the Securities and Exchange
Commission on February 12, 1995 forestablishing the country's second stockexchange.
The Exchange comprised of twelve Boardmembers, presided by Mr. Amir Khosru MahmudChowdhury (MP) and run by an independentsecretariat from the very first day of itsinception. CSE was formally opened by thenHon'ble Prime Minister of Bangladesh onNovember 4, 1995.
The mission of the CSE is to create oneffective, efficient and transparentmarket of international standard to saveand invest in Bangladesh in order tofacilitate the competent entrepreneur to
raise capital and accelerate industrialgrowth for overall benefit of theeconomy.
The Chittagong Stock Exchange believesthat a dynamic, automated, transparentstock exchange is needed in Bangladesh.It works towards an effective, efficientand transparent market of internationalstandard to serve and invest inBangladesh in order to facilitate thecompetent entrepreneurs to raise capitaland accelerate industrial growth foroverall benefit of the economy and keep
pace with the global advancements.
Missions
Chittagong
Stock
Exchange.
ABOUT CSE
Background
Vision:
The visions of CSE are as follows:
a) To develop a strong platform for raising capitalb) To provide an investment opportunities for the investor
c) To develop a corporate culture through mandatory corporate membership
d) To develop a transparent market ensuring investors interest
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Chittagong
Stock
Exchange.
e) To expand the capital market
f) To collect, preserve and disseminate data and information on stock market
g) To provide a fully automated trading, clearing and settlement system to ensure quick,
easy, accurate and easily accessible to all transactions
h) To make interest about Bangladesh stock market for the non-resident Bangladeshis toinvest in this market
i) To develop a research sell for analyzing status of the market and economy
j) To attract the investors for getting membership of SEC
k) To ensure smooth customer service and truncation
l) To achieve goodwill
m) Total necessary steps for increasing customers.
3
Objectives
Develop a strong platform for entrepreneurs raising
capital;
Provide a fully automated trading system with mostmodern amenities to ensure: quick, easy, accurate
transactions and easily accessible to all;
Undertake any business relating to the Stock Exchange,
such as a clearing house, securities depository center or
similar activities;
Develop a professional service culture through
mandatory corporate membership;
Provide an investment opportunity for small and large
investors;
Attract non-resident Ban ladeshis to invest in
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BOARDS OF DIRECTORS
Legal base of CSE
As legal entity CSE is a not-for-profit public
limited company. All of its 129 members are
corporate bodies. It has a separate secretariat
independent of policymaking Board. TheBoard comprises of brokers and non-brokers
directors with equal proportion to ensure thetransparency.
The Board constituted Committees to delegate
such functions and authority as it may deem
fit. There is an independent secretariat headed
by a full time Chief Executive Officer. CSE
activities are regulated by its own regulations
and bye laws along with the rules, orders and
notification of the SEC.
Chittagong
Stock
Exchange.
4
Sl. No.Name of the Directors Designation Elected/non
-elected
1 Mr. MKM Mohiuddin President Elected
2 Mr. Nasiruddin Ahmed Chowdhury Vice -President Elected
3 Mr. Fakhor Uddin Ali Ahmed Vice -President Elected4 Mr. A.Q.I. Chowdhury, OBE Vice -President Elected
5 Mr. Abu Sayed Md. Shahidullah Director Elected
6 Mr. Al Maruf Khan Director Elected
7 Mr. A.S.M. Nayeem Director Elected8 Mr. Bijon Chakroborty Director Elected
9 Mr. M. Salman Ispahani Director Elected
10 Mr. Murshed Murad Ibrahim Director Elected
11 Mr. Syed Mahmudul Huq Director Elected
12 Mr. Tareq Kamal Director Elected
13 Dr. A. Majeed Khan Director Non-Elected
14 Prof. Abu Ahmed Director Non-Elected
15 Engr. Ali Ahmed Director Non-Elected
16 Mr. Amir Humayun Mahmud Chowdhury Director Non-Elected17 Mr. Anis A. Khan Director Non-Elected18 Mr. Farooq Sobhan Director Non-Elected
19 Mr. Mamun Rashid Director Non-Elected
20 Mr. Md. Sarwar- E- Alam Director Non-Elected
21 Prof. Rabiul Husain Director Non-Elected
22 Mr. Mohd. Safwan Choudhury Director Non-Elected
23 Mr. Waliur Rahman Bhuiyan Director Non-Elected
24 Mrs. Yasmeen Murshed Director Non-Elected
25 Mr. A.B.Siddique Director Ex-officio
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The CSE Board of Directors is
comprised of a maximum of 25members, of whom the GeneralBody of the Exchange elects 12and Securities and Exchange
Commission nominates 12. TheBoard elects its own President
and 3 Vice- Presidents. TheChief Executive Officer of CSE
is an ex-officio member of theBoardThe core responsibility of theBoard is to frame the CSE
policies and supervise theExchange's operations:
MANAGEMENT TEAM
Chief Executive Officer: The CEO is responsible for implementing the decisions of the Board, the day to day running
of the exchange and formulating strategic plans for agreement with the board.
Functional department
Corporate department Market operations Compliance department System department Finance department
R & Ddepartme
nt
Clearing andsettlement
Membership
Listing
Inspection
Surveillanc
e
Chittagong
Stock
Exchange.
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Chittagong
Stock
Exchange.
CORPORAT E D E P AR TME NT
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This department carries out the following functions:
Maintain library contents
Press cuttings and press relations
Produce portfolio and other CSE publications Public relations
Investor's information cell
To fulfill the need, CSE has been publishing a monthlybulletin named market update since from its verybeginning. From November 1997 this monthly bulletinwas replaced by its upgraded version under a new titlePortfolio. Portfolio is publishing regularly withincreasingly better content, sharp analysis and greaterquality. In the year 2000 CSE decided to publishPoprtfokio quarterly instead of monthly. Anothermonthly publication is newsletter in Bengali.
These library contains international newspapers,journals, stock market related books, publications,listed companies information, CD-rom, video cassettes,annual report of different stock exchange and of
course, different course related books of differentcategories. The library has been steadily expandingwith accession of more books and periodicals, althoughits user has not been increasing.
The CSE market transaction data are regularly updatedin every 2 hours on this web site, which includes thecurrent issues of the Portfolio. CSE also update its website time to time, especially when any change tookplace.
Research, Corporate Development &Information:
Chittagong
Stock
Exchange.
Portfolio:
Library:
Web site:
C LEAR ING & S ETTLEMENT
7
Research and publications are essentialpre-requisites for effective functioningand development of any stock
exchange.
CSE has developed and maintaining aspecialized and well furnished libraryfor the use of the members, brokers,dealers, executives as well as studentsto fertilize the education know-how.
CSE has an excellent and attractiveweb-site containing CSE history, rulesand regulation, information regardingtrade, listed companies, financialinformation and so on, for the netbrowsers.
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The selling members deliver the
securities to the Clearing House on the
pay-in day in case of physical
settlement and make available the
required securities in the clearingaccounts maintained with CDBL in case of
dematerialized securities. Members are
required to open clearing accounts with
depository participants of CDBL.
The Clearing House delivers the
securities certificates to the buying
members on the pay-out day and CDBL
credit the required securities to the
buying members clearing account in case
of dematerialized securities if there is
no receivable money pending.
Settlement of transaction offoreign buyer and/or seller
involving a custodial bank
is done directly between the
members through the
custodial bank with
intimation to the clearing
house.
Chittagong
Stock
Exchange.
SPECIAL SETTLEMENT REQUIREMENTS FOR
FOREIGN INVESTOR INVOLVING
CUSTODIAN BANK
FAILED TRADES:
If a member fails to deliver securities or make payment on the settlement day, the stock exchange
automatically auctioned the unsettled transaction on the risk and account of the defaulting member.
No prior notice is given. The defaulting member is not allowed to carry out trading from the day
after settlement day until payment of the outstanding money and a fine as decided by CSE.
The Clearing House receives cheques from the buying member on the pay in day and the selling member received
cheques from the Clearing House on the pay-out day if there are no receivable securities pending.
CATEGORY WISE SETTLEMENT SYSTEM AND SETTLEMENT CYCLE
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Chittagong
Stock
Exchange.
Pay and pay out day for Spot order transactions of all categories of companies are T+0 and T+1 respectively.
Direct settlement of foreign buyer and/seller shall be within T+5 and intimation thereof to CSE within T+6
[Notes: T stands for Trading day;]
MARKET OPERAT ION
10
Categor
y
Criteria Settlement System Settlement Cycle
A Mutual Fund, Regular AGM, Declared and
paid at least 10% dividend within sixty days
from the date of declaration and Submission
of compliance re thereof to SEC within seven
working days from the date completion of
disbursement
Netting for payment obligation and
trade for trade for securities
obligation
Pay in day = T+1
Pay out day = T+3
B Regular AGM, Declared and paid Dividend
less than 10% and Submission of thecompliance Report to SEC within the time
limit
Trade for Trade for both securities
& money obligation
Pay in day = T+ 1
Pay out day=T+3
G Greenfield companies Trade for Trade for both securities
& money obligation
Pay in day = T+ 1
Pay out day=T+3
N All newly listed companies except Greenfield
companies
Trade for Trade for both securities
& money obligation
Pay in day = T+ 1
Pay out day=T+3
Z Irregular AGM or Declared no dividend at all
or declared dividend but failed to pay it off or
Submission of the requisite compliance report
to SEC within the time limit or Not inoperation for six months, or Accumulated loss
after adjustment of reserve, if any, is negative
and exceeded its paid-up capital excluding
those who declared dividend.
Trade for Trade for both securities
& money obligation
Pay in day = T+3
Pay out day = T+7
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Monitor public information
Monitor, receive and disseminate regular company
information
On-line surveillance
Inspection visits to members
Receive and disseminate price sensitive company
information
Receive and manage investor complaints
Receive and manage other complaints
Manage and monitor OTC facilities
In terms of the matching process, there aretwo methods:1. Orders are sorted and matched withopposite orders of the best price. Waitingorders are automatically in the followingsequence keeping the system fair andtransparent:
Best Price
Within Price, by time priority.
The best buy order will match with the bestsell order. The best buy order for a seller isthe one with highest price and the best sellorder for a buyer is the one with lowestprice. An order may match partially withanother order resulting in multiple trades.
2. Orders are queued for matching at aspecified time at a single price.Subsequent to matching, trade confirmationsare sent to the respective workstations, whichcan be printed on-line. The system displaysscrip and market-related information requiredto support traders.
TRADING ORDERS
CSE trading system provides immense flexibility to the investors in
terms of kinds of orders that can be placed to trade. The system allow
the user to modify or cancel an order prior to execution.
The most frequently order on the CSE is the "limit order, which is an
order to buy or sell at a specific price. Conditions related to time can easily made into a limit order, which are as follows
A GTC order is the order that remains in the system
for a period not exceeding one calendar week or themember cancels it.
A GFD is the order, which is valid for the day on
which it is entered. If the order is not matched durin
the day, the order gets cancelled automatically at th
end of the trading day.
A GTD order allows the member to specify the
number of days not exceeding one calendar week fwhich the order shall stay in the stay in the system.
At the end of this period the order shall be deletedfrom the system.
GOOD
TILL
CANCELLED(GTC):
GOOD
FOR
DAY (GFD):
GOOD
TILL
DATE (GTD):
Chittagong
Stock
Exchange.
This department carries out the following functions:
TRADING SYSTEM
The Chittagong Stock Exchange was the first stock exchange in the country tointroduce automated trading system on June 1999. The trading system at CSE knownas CHITTRA connected major cities of Bangladesh enabling all members to trade nationwide simultaneously with ease and efficiency.
Order Matching Mechanism
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Market order
1
Drip Feed Order
2
Stop Loss Order
3
Match at Closing Price Order4
Spot Order
5
Odd Lot Order
6
Bulk lot order
7
Big Lot Order
8
Auction Order
9
Chittagong
Stock
Exchange.
In addition to limit order, the Exchange
has introduced other following types of
orders for the investors:
Market Order is an order to buy or sell a certain quantity of
particular security at the best price or prices prevailing in themarket at that point of time.
A Drip Feed Order is an order in which the member has the option
to specify a replenish quantity along with the total order quantity.
A Stop Loss Order allows the member to place an order, which
gets activated only when the market price of the relevant security
reaches or crosses trigger price. A stop loss order can be modifiedor deleted until it is not converted to a limit order.
A Match at Closing Price Order allows the Member to specify
order to be executed at Closing Price.
Members shall be allowed to carry out spot order on CSE systemarising out of closure of book or closure of the renunciation period
of listed Companies. A spot order is traded against another spot
order only.
Any share quantity, which is not a market lot or multiple of
market lots, shall be called Odd Lot. While matching the system
would match orders only if the quantity (odd) of the order is fully
satisfied by one of the opposite order.
Bulk lot orders are multiple of market lot orders, which contain
multiple numbers of certificates. Each of the Bulk lot order shall
match with equal quantity and best price. The minimum amount
for a bid of bulk lot for a certain security shall be Tk 0.5 (point
five) million at market price unless otherwise fixed by the Board
time to time with the approval of the SEC.
Big lots are multiple of market lots inscribed in one single
certificate. Each of the big lot order shall match with equal
quantity and equal or better price.
Auction Order shall be an order entered by CSE. The Exchange
will specify a rate with price brand for each security when puttingthe auction order. The auction orders entered by CSE cannot be
modified or deleted once the auction session has started.
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The trade takes place from Monday to
Friday except holidays declared in
advance by the Exchange.
The market timings of normal trading
session are:
The opening price of a
security shall be the price at
which maximum number of
securities is matched in
opening session.
Computation of closing price of scripts
The closing prices of scripts are computed on the basis ofweighted average price of all trades in the last 30 minutes
of the continuous trading session. However, if there is notrade during the last 30 minutes, the weighted average
price of maximum 50 (fifty) number of trades preceding
the above 30(thirty) minutes shall be taken fordetermination of closing price. In case there is no trade in
the security during the continuous trading session the
opening price of the security shall be treated as the closing
price.
Guidelines:
The following standard upward and
downward price limits are applicablefor A B G & N category
companies for each market days
However the above price limit will not be applicable in the following cases:
There is no price limit for Z category companies. Free trade of Z category is allowed for eachmarket day. However, for Z category shares Circuit Filter @10% is applicable and the circuit filter iscalculated on the basis of last traded price of the shares of this category during trading hours
A newly listed securities is allowed for free trade for first 5(five) consecutive market days.
Free trade is also allowed on the subsequent trading day of receiving price sensitive informationlike rights issue, bonus issue and dividend from the listed company. After the day, the price limit willbe applicable as usually.
Free trade is allowed on the first trading day subsequent to the record date from 12.00 noon tothe rest of the trading hours of the day due to closure of transaction resulting from record date/bookclosure date.
Chittagong
Stock
Exchange.
TRAD ING HOURS
Market Open: 09:40 hours
Market Closed: 14:30 hours
The system will also have sessions for Odd Lot, Spot and Auction sessions. These sessions however may take place simultaneouslywith the normal trading sessions or in a separate session after closing of normal trading session
OPENING & CLOSING PRICE CALCULATION
Previous days per share market price Limits
01. Up to Tk. 200 20% (Twenty Percent ) but not exceeding Tk.3502. Tk.201 to Tk.500 17.5% (Seventeen Point Five Percent ) but not exceeding
Tk.75
03. Tk.501 to Tk. 1000 15% (Fifteen Percent ) but not exceeding Tk.125
04. Tk.1001 to Tk. 2000 12.5% (Twelve Point Five Percent ) but not exceeding Tk.200
05. Tk.2001 to Tk.5000 10% (Ten Percent ) but not exceeding Tk.375
06. Tk.5001 and above 7.5% (Seven Point Five Percent ) but not exceeding Tk.600
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The CSE put in place a comprehensive risk management
system, which is constantly monitored to pre-empt any
trading failures. It collects margins from members toaddress the problems related to the volatile trading activities
as well as to settlement failure.
CSE imposes margin requirements on the members
additional trade exposure. Additional trade exposure meansthe amount of the aggregate (gross) trade exposure
exceeding the free limit for each member. Aggregate (gross)
trade exposure is computed on the total buys and total sales
position of a member at any point of time during a trading
day. The free limit on the amount of the gross trade
exposure to trade in CSE is taka one crore per trading day.
The member shall pay the margins in cash, bank guarantee
or FDRs etc. within one hour of exceeding the free limit on
the amount of the gross trade exposure. As per ChittagongStock Exchange (Members Margin) Regulations, 2000 therate of depositing the members margin with the clearing
house on the additional trade exposure are as follows:-
Exposure limit violationThe trading right of the members who exceeds the free limit
without depositing margin to CSE within the prescribed time
shall remain suspended.
Adjustment or refund of members margin:-The Exchange can realizes the value of the margin instruments
and adjusts the amount so realized if member fails to settle his
trade with the clearing house on the settlement day.
The member shall be liable to pay the shortfall, if any,
including the costs, interest, charges and expenses involved in
the realization process, within three days of the written notice
of demand issued to him by the Exchange.
Chittagong
Stock
Exchange.
MARG IN REQU I REMENTWITH CSE
14
ADDITIONAL TRADE EXPOSURE MEMBERSMARGINRA
TE
(a
)
Above taka one crore but not
exceeding taka two crore
@ 20%
(
b
)
Above taka two crore but not
exceeding taka three crore
@30%
(c
)
Above taka three crore but not
exceeding five crore
@50%
(d
)
Above taka five crore @100%
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Chittagong
Stock
Exchange.
TRANSACT ION BY CL INT ON MARG IN
A member may provide broker service to its client on cash account and /or margin account basis. Client
who pays in full for the cost of the securities purchased uses cash accounts. Margin is buying securities on
credit while using those same or other securities as collateral for the loan. A client is authorized to borrow
part of an investments total purchase cost from their brokerage firm using margin accounts. Brokers have
policies and procedures to protect themselves from market risk, as well as credit risk. As per Margin Rules,1999 the member in no way extends credit facilities to its client until and unless the client maintains margin
account with the broker through a written agreement. The client needs to carefully review the margin
agreement provided by broker. The client shall deposit margin not later than seven days from the first date
of securities transaction in the form of cash, securities issued by the Government or its agencies, margin
able securities etc. The amount of the initial margin would result in the equity being not less than 150% ofthe debit balance in the account. Additional margin is required to be deposited if the account falls below
150% of the debit balance. The failure to do so may cause the broker to force the sale of or liquidate the
securities in the clients account in order to bring the accounts equity back up to the required level.
Your Risks Involved With Trading on Margin
As a client you may generally use margin to expand your
purchasing power. However it also run the risk there are a
number of risks that all investors need to consider in
deciding to trade securities on margin.
These risks include the following:
1. You can lose more funds than you deposit in the margin
account: A decline in the value of securities that are
purchased on margin may require you to provide additionalfunds to the broker that has made the loan to avoid the
forced sale of those securities or other securities in your
account.
2. The broker can sale of securities in your account: The
broker can sell the securities in your account to cover themargin deficiency. You will also be responsible for anyshort fall in the account after such a sale.
3. The broker can sell your securities without contactingyou: Some investors mistakenly believe that a broker must
contact them for a margin call to be valid. As a matter of
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How do we benefit you?
1. Automatic credit: All your purchases will be credited to yourAccount with just instruction. Added to this all the corporate actionlike bonus shares, shares under scheme of spilt, amalgamation, etc.,will be credited to your account automatically.2. Off market settlement: We carry out settlement of trades not doneon the stock exchanges (off-market trades).
3. Arrange Dematerialization & Rematerlization: We arrange toconvert the paper form of share certificates into electronic formthrough the process of dematerialization and convert the shares heldin electronic form into paper form i.e. Share Certificate(s) throughthe process of rematerialization.4. Transaction Statement: This monthly summary statement willshow opening balance, securities pending for Demat, transfers madeby you, credits received by you, quantity pledged or lent by you andthe closing balance for each security with appropriate description.5. Amendments to your profileIn case there is any change to the your personal profile like changeof bank A/c or change of address etc we will intimate all the companyin your portfolio regarding the change.
Given hereunder is a quick glance of the various milestones achieved by CSE as aDepository Participant.
FEES
As mentioned this is a value addition to our client. Hence
we have kept the cost very nominal. At the same time
maintaining our high standard of quality services that is
synonymous with our name.
Chittagong
Stock
Exchange.
good customer relations, most brokers will attempt to
notify their client but they are not required to do so.
4. You are not entitled to an extension of time to deposit
the margin: An extension of time to meet initial or
additional margin requirements may not be available toyou.
Please learn about the risks involved in trading securities on margin, and you should consult your brokers regarding any
matters they may have with your margin accounts.
DP SERVICE
CSE has opened Central DepositoryBangladesh Ltd. (CDBL). now it is
one of the Depository Participant (DP)of CDBL to give more Value AddedService for most esteems investors whoholds security in electronic form i.e.
YOU. Customer Services has alwaysbeen the prime focus and CSE attends
to the needs of the clients well on time.
ACCOUNT OPENNING
Similar to the brokers, who trade on yourbehalf in and outside the stock exchanges,
a depository participant is your
representative (agent) in the depository
system CDBL. The process of opening an
account with us is similar to the openingof a bank account. You require to sign an
agreement with us which will set out the
rights and duties of the both you and the
Exchange. Just like a bank branch, we will
maintain your securities account balancesand intimate to you the status of your
holdings from time to time. We will
dispatch the statement of holdings to you
periodically; however the statement of
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INTERNET TRADING SERVICES
CSE is not only the pioneer of establishment of nationwide trading mechanism. It also extended its networkto the abroad by introducing Internet Trading System on 30th May 2004. You may h ave access to ourtrading network not only from the premises of our brokers but also from personal computers in your homethrough the Internet.Internet trading is available on CSE. The CSE network allows its user to use internet as an order routingsystem for communicating clients orders to the CHITTRA through brokers. Broker can provide this serviceto their client after obtaining permission from respective stock exchanges. CSE has stipulated theminimum conditions to be fulfilled by brokers to start Internet based trading services.
Agreement with a Broker:
As an individual investor you need to open anaccount with a broker. When you are willing to use
Internet Trading Facilities, you will need to fill in a
special ITS Account Opening Form. The Terms and
Conditions to be followed by you and your broker for
ITS, will be little different from the regular trading
account. All the Brokers are not eligible for ITS.
Please see in the relevant section of this website or
email to us for a list of brokers who can offer youITS. Although the form is available on the net, you
still need to fill in and submit to the chosen broker a
hard copy of the form duly filled in.
Passwords
When you open an account, your broker will prepare
your electronic file. Your profile will be accessible
by you only. Your Login Id and Password are those
that you provided in yourRegistration Form. We
strongly recommend you to change your passwordimmediately and from time to time for better security.
And remember the password when you change it.DO
NOT DISCLOSE YOUR PASSWORD TO
ANYBODY. Remember, if you give your password
willingly or unwillingly, he or she can place order
and nobody but yourself will be liable for all those
transaction.
Deposits with your brokers and your trade limit
Make sure that you and your Broker have signed the
Safe Keeping Agreement. Once you have the Safe
keeping agreement, you can deposit shares and
money to your Broker. According to your deposit, the
Broker will set limit of your trade. You may either
have a Cash Account or a Margin Account. Consult
your broker before you choose.
Cash Account and Margin Account
If you have a CASH account, brokers may set limit to the extent
you deposit. For Margin account the Margin Rules 1999 will be
applicable.
Placing your order
Your orders placed through this system, if passes the validation
test will be forwarded to the CSE Trading engine. In the tradingengine, orders are matched on price and time priority. ITS is not
accepting any market order. All submitted orders have to be
limit orderExecution of Trade
Once you place order in the CSE Trading Engine, it will be
queued to be matched with another opposite order according to
the Chittagong Stock Exchange Trading Regulations 1998
Trade Confirmation
When your order is matched with another order, i.e., trade is
executed, you will receive a confirmation note on e-mail. Theemail will be generated by the computerised system and will not
require any signature.Post Trade Settlement
Your Broker will receive a consolidated report from the
Exchange of your buy and sell at the end of business. It is the
responsibility of the Broker to settle for you.
Check your position - your own index
The ITS is not only a system to check market and place order.You will also be able to see current value of your stock. CSE
ITS will give you opportunity to have your Personal Index.Collection of money and share certificates from your brokers
Safe Keeping service of your Brokers
Your Broker is bound to make settlement to you by delivery of
good securities and/or payment by cheque "good for payment "
within one day of its receipt of securities and/or cheque from the
Clearing House. You may keep a provision in your Safe KeepingService Agreement for the arrangement of the share and money
collected by your Broker.
Chittagong
Stock
Exchange.
holdings can be sent to you as and when
requested for a fee.
Chittagong Stock ExchangeThe introductory offer prices are as follows
Account Opening Charges 250/= Inclusive of Tk.100 as adjustable amount
Custodial Charges .06% (60 paisa in per thousand taka), minimum Tk.3.50Demat Charges .0004 ( 40 paisa in per thousand taka), minimum Tk.7.00 and
transportation charge Tk.30/=
Remat Charges .15 ( 15 paisa in per share), minimum Tk. 110/=
Transaction Charges(Buy & sell) .0004 (40 paisa in per thousand Taka), minimum Tk. 7.00
Annual Maintenance Nil
Statement of Accounts Free of cost
Billing Cycle End of month
Closure Fee AC Closing fee Tk. 50/=
1. Fees schedule are based on existing CDBL charges and may be changed at our discretion.
2. Additional statement will be charged Tk. 10/- per statement.
3. Service tax and other levies would be extra as applicable.
We intent to make your investment as easy as possible & simple too.
:: Procedure for Internet Trading ::
17
http://opentrddemo%28%27margin_rules.html%27%29/https://www.bangladeshstockmarket.com/i2_n.shtmlhttps://www.bangladeshstockmarket.com/i2_n.shtmlhttp://www.bangladeshstockmarket.com/UserRegistration?action=UserRegistrationFormhttps://www.bangladeshstockmarket.com/proc_n.shtml#accshttps://www.bangladeshstockmarket.com/proc_n.shtml#accshttp://opentrddemo%28%27margin_rules.html%27%29/http://openglossary%28%27glossary/m.html#m6')http://openglossary%28%27glossary/l.html#l6')https://www.bangladeshstockmarket.com/i12_n.shtmlhttps://www.bangladeshstockmarket.com/i12_n.shtmlhttp://opentrddemo%28%27margin_rules.html%27%29/http://openglossary%28%27glossary/m.html#m6')http://openglossary%28%27glossary/l.html#l6')https://www.bangladeshstockmarket.com/i12_n.shtmlhttps://www.bangladeshstockmarket.com/i2_n.shtmlhttp://www.bangladeshstockmarket.com/UserRegistration?action=UserRegistrationFormhttps://www.bangladeshstockmarket.com/proc_n.shtml#accshttps://www.bangladeshstockmarket.com/proc_n.shtml#accs -
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
INTERNET TRADING REGISTERATION FORM:
USER REGISTRATION
All the fields are compulsory except those marked as optional
BROWSING DETAILS
Login Name (maximum 8 characters)
Browsing Password
(must be 8 characters)Re-enter Browsing Password
Legal Statusin case of company fill the company details below
The personal details are to be filled only if the legal status of the investor is NRB / Individual
PERSONAL DETAILS
First Name
Middle Name (optional)
Last Name (optional)
GenderFemale Male
Date of Birth / / as dd/mon/year (eg.12 Jan 1980)
Occupation
COMPANY DETAILS
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Md.Yousuf Chowdhury
Register
Chittagong
Stock
Exchange.
Company Name
Date of registration / / as dd/mon/year (eg. 12 Jan 1980)
COMMUNICATION DETAILS
Address1
Address2 (optional)
Country
Post Code
Telephone No(STD code - Telephone No)
Mobile Phone No (optional)
Email Id
Mobile Email Id (optional)
DEPOSITORY ACCOUNT / BROKER DETAILS
DP Id (optional)
BO Id (optional)
Broker Code / Sub-Broker Code / Broker / Sub-Broker LookUp
FINANCIAL DETAILS
Name of the Bank
Bank Branch Name
Bank Account No
TIN No
19
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
The value of the CSE share is BDT 3.00
million. An
individual/company/corporation, if he/it
becomes the member of the Exchange
and fulfill the eligibility criteria, he/it
will have to pay Tk. 50,00,000/- (Tk.
Fifty Lacs) as value of share, Premiumand Entrance fee as :
Vale of Share : Tk. 3,00,000.00
Premium : Tk.40,00,000.00
Entrance fee : Tk. 7,00,000.00
The eligibility criteria for the membership are presented below:
A corporate body with a minimum paid up capital of BDT 2.5 million
Any partner or director thereof as the case may be is/has not
Less than twenty-one years of age;
Bankrupt;
Person of unsound mind;
Person convicted by a competent court of an offence involving moral
turpitude.
Found at any time by SEC or any stock exchange or court involved in anymisconduct in respect stock exchange transaction/market
OVER-THE COUNTER
A new phase for the listing facility in the Capital Market. OTC is designed for two segments of companies
The companies who are delisted from trading
Growth companies who are preparing for coming to the stock exchange.
CSE established Over the Counter facilities with a specific facilitate small & medium innovative and high growthenterprises, in raising resources efficiently through the capital market.
Chittagong
Stock
Exchange.
COMPL I ANCEDEPARTMENT
M E M B E R S H I P
ELIGIBILITY
Membership of CSEfacilitates a person
prospects to becometrading members (stockbrokers) of the Exchangethrough compliance of the
regulatory provisions ofCSE and SEC. There are129 members in CSE all ofwhom are corporatebodies.
Individual may apply and receive membership on condition that they form a corporate body within a specified time,
usually 6 months from the date of the allotment letters issued to them.
BE A CSE MEMBER
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
Tk. 10, 00,000.00 (Ten Lacs) should be paid along with the
application as earnest money.
Balance amount of Tk. 40, 00,000.00 (Forty Lacs) should be
paid within 15 days (Fifteen days) from the date of allotment of
the membership.
Failure to pay the full amount within the specified time wilresult in cancellation of allotment of the share and no notice will
be required for this cancellation and the amount of Tk.10 (Ten
lacs) paid with the application will be REFUNDED in ful
without interest within 4 (Four) weeks from the end of 30(Thirty) days of allotment.
All payment should be made by Demand Draft/Pay Order
payable only to Chittagong Stock Exchange Limited.
In case the application is not accepted, the deposit of Tk. 10
00,000.00 (Ten Lacs) will be REFUNDED without any interes
by the Exchange within four weeks from the day of such
decision of refusal.
The CSE membership is transferable
subject to the approval of the Board.
However a fees of Tk. 2, 50,000.00/- isto be paid to the Exchange.
Admission to membership of the
Exchange is currently open and
available.
Broker and Dealers shall be eligible to trade in CSE when it:
Becomes a members of the CSE;
Becomes members of the CSE Clearing House;
Open a Clearing Account with a Depository Participant of
CDBL;
Obtains a Brokerage/ Dealership license from the Securities
and Exchange Commission;
Is not otherwise barred by CSE or SECThe CSE brokers/dealers are required to comply with various
requirements for continuing membership. These include:
Submission of:
Audited Annual Accounts within four months of the end of the
financial year;
Monthly Net Capital balance Report;
Shareholding pattern by-yearly;
Any changes in respect of management, structural or legal status
of Stock dealers/ stock brokers should be informed to the
Commission within 15 (fifteen) days through stock exchange;
Compliance Authority report relating to the compliance of rules
and regulations of the Exchange and SEC by his/her Member
Company. The report will have to submit to the Exchange within
15 days after the end of every six-month period ending on 30th
June and 31st December of the year.
Maintenance of the net worth at least half of its paid up
capital at all times.
Renewal of their license annually with SEC.
COMPLIANCE WITH RESPECT TO BROKER/DEALERS
KERS/DEALERS
Procedure of payment for CSE Membership:
AUTHORISED REPRESENTATIVE
CSE broker/dealer may appoint
Authorized Representative who are
registered with CSE and SEC to act as
an agent for doing all the activities
related to buy and sell of securities
through the stock exchange. The
Authorized Representatives shall
Not be less than twenty-one
years of age;
Have educationqualification of HSC or
equivalent;
Not be adjudicated as an
insolvent
Not be a person of unsound
mind;
Not be convicted by a
competent court of an offence
involving moral turpitude;
Not received punished from the
Commission or Stock Exchange.
Chittagong
Stock
Exchange.
BROKER/DEALER
A broker, dealer or their authorized representatives complies with Code of conduct prescribed by SEC.
21
The trading platform of a stock exchange is
accessible only to broker, dealer and their
authorized representative. At present
Dealers can perform transaction on their
own account only while brokers act as agent
of their client.
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
Prohibition from any performance of work
in a member company within the period of
time rescribed b the Board
Chittagong
Stock
Exchange.
COMPL I ANCE AUTHOR I TY
Every Broker/dealer shall appoint one of its director or Chief Executive Officer as compliance
Authority for a period not exceeding three years at a time subject to the following:
He/she is not convicted of any criminal offence involving moral turpitude by a
competent court;
He/She has not been found by the Stock exchange or court involved in misconduct in
respect of transaction in any security
He/ She have obtained at least graduation degree.
D I S C I P L I NARYACT ION AGA IN S T MEMBER
22
CSE may exercise any of its
following disciplinary powers
against a member if themember or its director,
authorized representative or
employee commits any act or
omission as mentioned in theRegulation 79 of the General
Rules and Regulations of
CSE.
http://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htmhttp://www.cse.com.bd/rules01-general%20rules%20&%20regulations.htm -
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
Arrange training
Ad hoc legal problems
Liaison with Securities and Exchange Commission
Maintain master organ gram
Maintain personnel files and staff list
Monitor and record leave requests and leave taken
Monitor rules and regulations
Monitor, receive and disseminate regular companyinformation
Respond to requests for information, members queries and
CSE while list a company considers
ensuring that the companies meet thelisting criteria of the Exchange and also
considers the sufficiency of public
interest in the company.
The main eligibility criteria for initial listing contained in CSE
Listing Regulations is as follows:
The Company shall be a Public Limited Company under
the Companies Act,1994
Minimum Paid up capital of the applicant companyshall be BDT Ten Million (USD 0.20 million)
Share subscription must be by at least 250 applicants
In case your company fulfils the criteria, please fill in the listing
application form and send the documents as mentioned in the
regulation III (6) of the LISTING REGULATION for further
Chittagong
Stock
Exchange.
The expelled member shall forfeit to the Exchange its right of membership and all rights and privileges as a member of
the Exchange
L I S T I NG
This department is responsible for:
HOW TO L I S T
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
A
N
N
U
AL
L
I
S
T
I
N
G
F
E
E
L I S T I N G F E E S
I
N
I
T
IA
L
L
I
S
T
I
N
G
F
EE
Chittagong
Stock
Exchange.
LISTING FEES
INITIAL LISTING FEE:
Up to Tk. 10 crore of Paid-up capital @ 0.25%
Above Tk. 10 crore of paid-up capital @ 0.15
However, the total listing fee shall be minimum of Tk. 10,000 (ten thousand) and
maximum of Tk. 20 lac.
A N N U A L L I S T I N G F E E
Slab/Paid-up Capital (Tk. In Million) Rates of Annual Listing Fees in Taka.
Up to 10 10,000
Above 10 & Up to 20 15,000
Above 20 & Up to 30 20,000
Above 30 & Up to 40 25,000
Above 40 & Up to 50 30,000
Above 50 & Up to 75 35,000
Above 75 & Up to 100 40,000
Above 100 & Up to 125 45,000
Above 125 & Up to 150 50,000
Above 150 & Up to 200 55,000
Above 200 & Up to 250 60,000
Above 250 & Up to 300 65,000
Above 300 & Up to 400 70,000
Above 400 & Up to 500 75,000
Above 500 & Up to 600 80,000
Above 600 & Up to 700 85,000
Above 700 & Up to 800 90,000
Above 800 & Up to 1000 95,000
Above Above 1000 100,000
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
DISCLOSURE PROCEDURE
The investors have equal and prompt access tocompanys price-sensitive information. Listed
companies are required to file full, accurate and
timely information disclosures to the investors.
This will guarantee fair and orderly trading at
the Exchange. CSE monitor whether the listed
company notify timely and orderly the news ofany notice of the Meeting and entitlement, or
any decision related to the shareholders
immediately.
Essential information, which may affect the
stock prices, investment decisions, or investor
interests, must be disclosed within a specific
period, according to the table below:
DIRECT LISTING
Direct Listing is a doorway to list with the
Exchange for the company who
Does not require to increase its
existing paid up capital but want to list its
securities for prestige, liquidity benefit or
any other reasons and
Intent to off load the existing shares
of the shareholders for privatization
purpose.
1. Eligibility criteria for direct listing: The public limitedcompany having minimum paid Up capital of taka 100(one hundred)
million may apply for direct listing to CSE if it is/has
No accumulated loss
Regular in holding the AGM
in commercial operation for at least immediate last fiveyears and
Has profit in three years out of the immediate last fivecompleted accounting/financial years with steady growth
pattern.
2. Application for Listing:The application fee for Listing is Tk.10,000/-(ten thousand). The Exchange examines among others the
following documents while giving approval to the listing:
Audited financial statements for the last five years.
A Credit rating report issued by the credit rating company
registered with the Commission with minimum investment grade
of BBB".
Due diligence certificate from the directors
No objection certificate from the lending bank(s) /financial
institutions of the company
Status of loan including information concerning loan default
Information Document
3. Information about the company to the General Public:The Company shall prepare an Information Document for the
purpose of communicating to the general public the informationrequired to an investor for their investment decision. Information
Document shall be published in at least two widely circulatednational dailies minimum 7 (seven) days before commercial trade
upon listing by the Exchange.
4. Disposal of Shares:The existing shareholders of the concernedcompany shall sell the shares through the Exchange upon listing. At
least 10% of their shareholdings in the company must be offered for
sell to the public within 30(thirty) working days from the date oflisting. However they are not permitted to sell more than 50% of his
existing shareholdings until the company holds the annual general
meeting after completion of one full accounting year of the company
upon listing with the Exchange.
5. Tradin and Settlement rocedure:Dematerialization of the
The Exchange disseminates the information through their respective trading terminals immediately after receiving thereof
from the listed company. Some information also requires to be disseminated through the newspapers by the issuers for its
shareholders after sending the news to the Exchange or the SEC.
Chittagong
Stock
Exchange.
The Board of CSE has the right to ease any condition in case of a deserving case.
LISTED COMPANY INFORMATION
COMPANY PROFILE COMPANY ADDRESS COMPANY DISCLOSURE (YEAR WISE)
25
A price sensitive information to
the Exchange
Within 30 minutes of the
completion of the Board
Meeting
A report of every sponsor or
director of a listed
Before 30 working days of
company disclosing his intentionto buy or
his expressing such
Sell or otherwise dispose of
securities in the company.
intention
The audited financial statement
requires to be submitted
Within 134 days from the
date on which the financial
years ends
Half Yearly Financial Statement
shall be transmitted
Within one month of close
of the first half-year
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
DE LISTING
Grounds for explicit de-listing/cancellation oflisting criteria are as follows:
Fails to comply with the requirements of
any of CSE listing regulations;
Where the Exchange considers it
necessary for the protection of investors;
Fails to pay penalty or any other dues
payable to the exchange for a period of
two years;
Fails to declare dividend or bonus:
i) for five years from the date of
declaration of last dividend or bonus; or
ii) in the case of manufacturingcompanies, for five years from the date of
commencement on commercial
production; or
iii) for five years from the date of
commencement of business in all other
cases
Fails to hold its AGM for a continuousperiod of three years;
Gone into liquidation either voluntarily or
under court order;
Fails to pay the annual list fees for a
period of 2 years;
If securities are quoted below 50 per cent
of face value for a continuous period of
three calendar years.
No com an will be de-listed from CSE unless
In a brief it performs the following
functions:
a) Spot verification
b) Check whether members are
following the company act or not
c) check whether members are
maintaining the books properly
d) maintain checklist
Chittagong
Stock
Exchange.
INSPECT ION
During the period, eleven brokerage
houses were inspected by SEC based on
some specific observations of
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
Chittagong
Stock
Exchange.
surveillance people responsible for
monitoring daily securities trading. In
this period the Commission requested CSE
to investigate into the books and
records of three brokerage houses of CSE
in respect of transactions of Bank Asia
shares and asked DSE to inspect books
and records of three brokerage houses of
DSE regarding trading of Bata Shoe
Company shares, Beach Hatchery Ltd
shares and Rahman Chemical shares. In
the referred period the Commission
decided that the SECs Surveillance Team
should conduct regular inspection of
books and records of at least one stock
broker/dealer of the stock exchanges in
each month. Accordingly, the SEC
Surveillance team carried out inspection
in compliance with the aforesaid
decision.
The SECs Surveillance team also detected unusual/abnormal trading of Tripti Industries Ltd, at DSE. Based on therecommendation of the Surveillance Team the Commission suspended trading of securities of Tripti Industries Ltd. and
constituted an enquiry committee in this respect. During this period the SEC requested DSE to investigate into thesecurities transactions of Lafarge Surma Cement Ltd. and NCCBL and requested CSE to investigate into securities
transactions of Lafarge Surma Cement Ltd. and BCIL. In the referred period, as a part of regular inspection, SECs
Surveillance Team visited two brokerage houses of DSE and two brokerage houses of CSE to examine books andrecords for ensuring proper compliance with the securities laws. Besides, the Commission constituted five enquiry
committees to enquire into the transactions of Mercantile Bank Ltd., Mutual Trust Bank Ltd., One Bank Ltd, Uttara
Bank Ltd. and Bank Asia Ltd.
SURVE I L LANCE
The Surveillance Department of the Commission monitors on real time basis the trading of securities on
Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. through non-trading version of work
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
MARKET SURVEILLANCE & COMPLIANCE MONITORING
CSE maintain an effective market surveillance to
detect and prevent unethical, unusual and illegal
practices in the market. The Exchange Complianceand Surveillance Department is primarily responsible
for day to day market surveillance, supervision and
compliance monitoring of trading activities, including
review of pricing of orders.
When any unusual market action occurs it is reported to the
Manager, Compliance and Surveillance. In many cases by
checking with Surveillance, the Manager will try to trace the
reason for the action to a specific cause such as recently
disclosed information, or rumors. Market surveillance may
also check broker firms as to the source and reason for
activity stemming from their particular firms. If no
explanation of the unusual activity is revealed the Exchange
may make a query to the Company to determine whether
they know the cause of the action. It the action appears to be
attributable to a rumor or report or to material information
that has not been publicly disseminated, the Company is
requested to take appropriate corrective action and may be
advised to halt trading until such action has been taken.
ENFORCEMENT
CSE put in place a thorough risk management
system which is regularly monitored to pre-
empt market failures. CSE Surveillance and
Compliance Department monitors the issuers
compliance activities and brokers regular
and/or trading activities on regular basis. It
watch performance of members, their net
worth, undertakes on-line monitoring of
members turnover position and exposure,margins arrangements with exchange and
clients etc.
The Department conducts investigation of any act
of member firms or listed companies, as the case
which may be deemed to violate the rules and
regulations of CSE and/or SEC and gather all
evidence concerning the said acts to pass it to the
relevant committee.
While taking action for violation of any rules and
regulation CSE send a show cause notice to the
company with an order to comply the relevant
clause. And if not complies within stipulated time
then take appropriate action which may be to
impose fine, to warn, to suspend or to de-
list/terminate the listed/member company.
Manage trading and operate VistaSettlement System
Maintain master file
Print daily reports and producestatistics
Support internal users and setup andtrain new system users
Chittagong
Stock
Exchange.
stations. Through this system the SEC Surveillance Officers watch the daily trading pattern and time to time
inform the top management of the Commission about the market condition. At the end of the trading period,
a report containing abnormal activities, if found during the trading period, is prepared and submitted to the
Chairman, Members and other senior officials.
MARKET SURVEILLANCE & ENFORCEMENT
SYSTEMS
The Systems Department carries out the following functions:
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
HardwareHardwareSoftwarSoftwar
ee
Wide area networkWide area network
(WAN(WAN)
Prepare and pay invoices
Prepare primary accounts Receive and bank cheques
Reconcile bank accounts and regular
cheques
Chittagong
Stock
Exchange.
Deal with user queries
Manage communication network
Manage information technology developments and suppliers
Manage internal information technology awareness
Support required by the department
F I NANCE & ADM IN I S TRAT ION
This department is responsible for the following: Act as company secretary Manage CSE finances
Manage income tax deductions and payments Manage petty cash
S W O T A N A L Y S I S
O F C H I T T A G O N G S T O C K E X C H A N G E
S t r e n g t h s :
29
Access server
Central server/ stratus C 4000
series
PA-Risc processor
Fault tolerant continuously
available
16 GB hard disk
512 Ram
512 cache memory
Speed 96 MHz
Modem
Olte
U.P.S
Data storage DAT
Application software
CSE version of the VECTOR
(versatile engine for centralized
trading and on line reporting)
It has 3 models
BWS (Broker work
station)
Market operation
Surveillance
System software
Operating system-Unix
RDBMS (relation data base
management system): Sybase
Regional network
Chittagong and Dhaka
members can connect their
own office through WAN
Sylhet members can connecthrough LAN
Country wide WAN
Network covers
Chittagong, Dhaka and
Sylhet.
Chittagong: Dhaka is
connected through VSAT and
T & T leased line as back up.
Ei line, High speed opticalfiber is used in the network
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I N T E R N S H I P R E P O R T
Md.Yousuf Chowdhury
1 .Trading from the three cities; out reach tovast investors:Chittagong stock exchange has asound trading system with network containing itthree major cities: Dhaka, Chittagong & Sylhet. Inthis way it operates from 3 major cities in
Bangladesh which really classified in expanding thestock market and eventually it helps the not onlythe existing investors to invest further but also helpthe new investor to come to invest their money.Sooth to say, it provides a strong communicationbounding through out the different cities.2. Ready for future by opening avenues forcross border trade: The trading & settlementsystem of Chittagong stock exchange limited isready to meet and future growth of the market.CSE expecting crosses border indexing under SAFF,(South Asian Federation of Exchanges). The market
is wide open now days. The world is highlyglobalized and market is getting much moresophisticated. In this way. CSE has taken initiativein following these rules as well. Its takenauspicious step for the investor by trying to openthe door cross border communication especiallySAFF. This step it a further in enrichment of itsdevelopment.
3. Very competitive low listing fees: Listingfees at CSE ltd. are very competitive & reasonable.
The listing fee for the up coming company is verymuch reasonable and thats really boosts up the
company to be listed. The fees category waspresented in the very early of this report.
4. Market analysis & investors relations:Chittagong Stock Exchange limited has a researchcell for continues market status apperception &understanding investors general behavior. The R/dis continuously forecasting the market, analyzingits changes, the reason behind it. It has a well baseguidelines for the brokerage firm any violation itwill be strongly prohibited as well as serious actionis taken. Being a part of it, continuous interaction is
5. The best way to raise fund for yourcompany: In the era of free economy &democracy, stock market provides aneffective linkage between large pool ofinvestors & entrepreneurs. Investors on
their free will can take risk & investdirectly with the project share ofownership & profit. Any company ororganization that wants to maximize itsfund can generate it through sharemarket. In sooth, here the company isinvolving the general people to be part thecompany. In this way, it maximizes itsfund for further development.
6. Reduce reliance on debt finance:Borrowing and their prescheduledcompulsory debt servicing could be
avoided if you are publicly listed company.
7. Tax benefits: If you are a listedcompany you pay less tax. At the currentrate, listed companies pay at least 5% lesscorporate tax than those who are notlisted.
8. Liquidity: Your shares will liquid.Entrepreneurs may love to develop oneproject successfully. Run it in atransparent way & they change into cashit when it need for the sake of developing
another one. Stock market can facilitateyour ambitious development path as anentrepreneur. Share can be converted anytime into cash. If you know have thesound notification about the market youwill be the master of it. Risk will be justhistory. People have common notion ofthis market in the very early of this marketthat there is too much risk and one cannot get maximum return but bit by bit this
W e a k n e s s e s :
1. Stock markets operate on a particular timein the daytime. This time span is notsufficient for the non-institutional investors.The time that it operates is very limited thatthe daily transaction in doing so can not befulfilled which puts the investor intremendous crisis.
2. High bank interest rate possesses highthreat for stock market. High interest ratealways discourages the investors.
3. Lack of institutional investors. Still there islacking for the institutional investor. The CSEoperations, the CSE criteria, rules andregulations are responsible for this. If thefavorable environmental attitude is availablemore and more institutional investor willcome.
4. Regulatory body like SEC needsmodernization. The controller of CSE,security exchange commission (SEC) needmore technological advancement. Tomaintain a constant monitoring it mustfertilize its resource like technological,personnel, departmental etc.
5. Lots of listed company does not perform
their duty regularly like they do not performAGM, GM regularly, do not provide dividendregularly, do not inform to be investors etc.The different organization is categorized intoA, B, N, and Z category. Those who performAGM regularly and declared dividend morethan 10% they are A category and whoperform AGM regularly and declared dividendless than 10% they are B category, who arenew they N category and those who do notperform AGM regularly and declared nodividend are Z category.
O p p o r t u n i t i e s :
I. Investors are now more conscious aboutinvesting their money into the shares of thecompanies. New awareness arising to the peoplesmind, new publicity is made for the attraction ofthis field. The system is much mobilized and trycapture more and more investors,
II. After 1996s incidence, now Securities &Exchange Commission (SEC). The SEC is now wellstructured and well-based, wellestablished.
III. The number of Internet users is increasing.Internet is a key part of trading. Day by day theusing of internet is accelerating, that allow theinvestors to an easy access of trading in terms ofshares. Now they can order the representativebroker to sell the shares or buy. So, internettrading system (ITS) is a wonderful innovation forCSE.
IV. The governments policy is changing. Thechanging environment in share market providesthe precise help to the investors.
V. Commercial Bank reluctance to provide long
term long.VI. SAFE (South Asia Federation of Exchange). OTC
market is a potential outcome for CSE. Now inthese very days, its prosecuting the south Asiancountries. The neighboring countries will be alsobenefited by this. Huge round of transaction maytake place in this way.
VII. Lots of quality fresh business graduate arecoming up from both private and public educationsector in Bangladesh. These fresh graduates maycreate an opportunities to stimulateprofessionalism in stock market.
Chittagong
Stock
Exchange.
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T h r e a t s :a. Regulatory bodys (SEC) regulation. The regulation of SEC still not up to mark that
may discourage in investing.b. BTTBs monopolistic attitude. The logistic approach is still prevailing. The attitude
should obtain an administrative driven.c. Bargaining power of listed companies. The continuous bargaining is still prevailing
which may impact in CSE.d. The lion share of DSE.e. Frequent political instability. The Micro environmental factor like political
instability always takes place in the country which seriously injured the investor. Andit case tremendous change in price flections of shares.
f. Lower growth rate & lower savings rate & per capita GDP.g. The pace of industrialization is slow. The contribution of industrialization sector in
GDP is bellow expectation.h. Most of the company do not provide satisfactory rate of dividend.
Key issue analysis:
1.Should CSE pour more money into R&D develop more sophisticated service quality.
2. Should CSE go for costly promotional campaign for expanding its current market to
attract new investors, Companies and Members.
3. Should CSE establish full-fledged marketing department to ensure proper marketing
and advertising activities.
Chittagong
Stock
Exchange.
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11 times more moneyinvesting in Japan in 1987than in the United States.
4 times more moneyinvesting in Hong Kong in1992 than in the US market.
4 times more moneyinvesting in Finland in 1998than in the United States.
More than 10 times asmuch investing in UK in 1990
than in US.
The stock market is acting like abull market for last few months. Itsounds like most stocks are goingto be uprising and volatile. No oneknows how long the momentumwill stay in the market.
Chittagong
Stock
Exchange.
Opportunities for Foreign investors In Bangladesh:
Bangladesh has adopted a very liberal industrial policy to attract foreign investment
No limitations pertaining to equity participation i.e. up to 100 percent foreign private
investment allowed.
Except five reserve sectors, all industries are open for private investment. Industries
earmarked for public sector investment are in the reserve sector namely:
(i) arms, ammunition and other Defense equipment and machinery
(ii) Production of nuclear energy,
(iii) Forest plantation and mechanized extraction within the bounds of reserved forests,
(iv) Security printing (currency notes ) & minting and,
(v) Railways & air transportation (except certain domestic routes and air cargo)
- No permission of the government
required to set up new industries.
-For obtaining industries facilities like
procurement of land, electricity, gas and sewerage connection, importation of capitalmachinery and raw materials tax rebate, duty drawback facilities etc. industries need only
to be registered with the board of investment (BOI) in a simple prescribed from.
Investing in stock market is help out a company in business which leads to remove poverty
Market earns about 500 to 800 points within 4 to 5 monthsin CSE and DSE which is a remarkable growth. DSE-20 was
1200 points in March and now it has jumped to 1777 and
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Investment companies that
continually offers newshares and buys existing
shares back at the request
of the shareholder and usesits capital to invest in
diversified securities of
other companies.
A security that gives small
investors access to a well-
diversified portfolio of equities,
bonds and other securities. Each
shareholder participates in thegain or loss of the fund. Shares
are issued and can be redeemed
as needed.
It is a recognized principle that diversification of
investment reduces risk. An individual may not have the time,
expertise and resources to undertake such diversification.
Here arises the advantage of a Mutual Fund. Mutual Funds pool
the savings of a great number of investors and make
investments in a wide array of securities. In Bangladesh ICB
has pioneered Mutual Funds for the sake of investors and of
the capital market. Mutual Funds are known as open end Mutual
Funds. The issued capital of a Mutual Fund is limited, that
is, a Mutual Fund offers a limited number of certificates for
sale to the public. The amount of capital and the number of
certificates of each Mutual Fund remains unchanged. ICB
Mutual Funds are independent of one another. A Mutual Fund
being listed is traded on the Stock Exchanges. Price of
Mutual Fund certificates after IPO is determined on the Stock
Exchanges through interaction of supply and demand. The
market price of a Mutual Fund certificates is available in
Stock exchange quotations and in newspapers.
Chittagong
Stock
Exchange.
CSE-30 has surged to 2517 points from 1577 since March of
this year. The Market looks stronger and has attracted more
investors recently, and investors remain fairly bullish and
have earned confidence in the stock market. The question
is, anyone or investors have real information about profits,sales growth, earning! Unfortunately it is not. It is difficult to
speculate a company's share price without real data on
whose business is growing in sales, who is grabbing the
market share and leading the market. That information is
not available yet to the public. It is true Bangladesh is one of
under developing countries with 112 millions of people. A lot
of development is essential to the country and it will happen
sooner or later. However, emerging stock market and
economy hardly get world attention. The market stays un-
attention to the investors because of revolt and government
corruption and natural disasters. When country's economy
gets started, they do it with a bang. According to study, the
Indian emerging markets will continue to grow at about
double the rate of the developed world. Every year there is
an emerging country, like Japan in the 1960s that grows at
least twice as fast as the United States. That means
business is booming....people have jobs and investors get
richer and richer. Let's take a look some of emerging
countries.
The moneymaking opportunities are endless when you invest in growing countries like China, Finland, India or probably
someday in Bangladesh but you have to invest wisely. Some of banking stocks went up sky-rocket and remained veryvolatile; they jump 20 to 80 taka a day. The primary needs for the country is energy, housing, food, banking, insurance
and pharmacy. It shows the banking sector is doing better than others. Every investor made out of Banking IPOs at least
200/300 taka. The most conservative way to invest in CSE or DSE with a good return in the companies who provide
dividend at least 10%. You know that you will get guaranteed return within a few months.
:: Mutual Fund ::
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Amutual fund is types of investment vehicle where investors
pool their money In order to allow each investor participate
in a portfolio of securities. The individual investor doesn't
actually own each security but instead, he owns shares of the
mutual fund. The main benefit of a mutual fund is that it
provides a way for the investor to achieve diversification in
his investments without having to invest a lot of Money. The
first mutual fund was the Massachusetts Investors Trustintroduced in 1924. At the end of its first year, the fund
had 200 investors with $63,600 in assets. At the end of 1995,
the fund grew to 73,500 investors with assets totaling $1.8
billion! Now there are over 7000 different mutual funds
available for you to choose from. You may be wondering why
you should choose a mutual fund. Simple - a mutual fund
offers 2 large benefits over owning the stocks individually.
Those benefits are diversification with professional
management without having to invest a lot of money.
Diversification is
important because it helps
to reduce the risk. By
owning shares of multiple
companies, the funds
share values are not
devastated if an
individual company has a
poor performance.Selecting which securities
to buy, the allocation of
cash and securities, and
when to purchase is all
done by the fund manager
or the management team.
The fund manager has the
training, time and the
resources to make the best
informed investment
decisions
Chittagong
Stock
Exchange.
WHAT IS A MUTUAL FUND?
B A C K G R O U N D
Mutual funds have become very important part of investing over the last decade.
Mutual fund shareholder accounts grew from 46 million to more than 131million
accounts with 38 million individual investors owning funds. In 1983 the mutual
fund industry had about $290 billion assets. By 1994 the asset base had
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Chittagong
Stock
Exchange.
increased to $2.1 trillion and by June of 1997 reached $4 million. The growth in
asset value is a result in the three year bull market experienced from 1995
through 1997 and the increased popularity of mutual funds by those baby boomers
saving for retirement. The tremendous growth of mutual funds makes this industry
the second largest financial intermediary after commercial banks.
The concept of a mutual fund is best
understood by an example.
Types of mutual fund: Mutual fund can be classified in totwo basic categories:
Open-end funds: An open-end investment
fund stands ready at all times to sell or redeem
shares from stockholders. There is no limit.
Closed-end fund: A closed end investment
fund has a fixed number of shares and purchaser
& sellers of shares must deal directly with each
other rather than with the fund. Closed end
funds trade on an exchange or over the counter.
Furthermore the fund does not stand ready to
buy the shares from the investors.
35
EXAMPLE: Suppose you and your friends
are too busy to develop the expertise
needed to mange your own assets. One of
your neighbors however, has had years of
hands-on experience as a trustee of his
companys pension fund. You and your
friend decide to pool your money and
have this experienced investor act as
your investment advisor. He will be
compensated by receiving a smallpercentage of the average amount of
assets under his management during the
forth-coming year.
Mutual funds are non banking or non
depository financial intermediaries that
gather funds from saving and investing
public and utilize the accumulated pool
of funds by investing in stocks, bonds,
currencies, futures, and options
contracts or a variety of other
financial instruments (A key element in
any M/F is its ability to provide the
investors with professional mgt. of
their funds along with otherprofessional services such as record
keeping, custodial services and prompt
dissemination of information)
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Chittagong
Stock
Exchange.
T Y P E S O F M U T U A L F U N D S A V A I L A B L E
Domestic Equity Funds - These mutual funds
mainly focus on stocks offered by different U.S.
companies. With this type of fund there is a widerange of offerings that takes into consideration the
size of the company, the stability of the company,
growth and the potential value of the company.
Global/International Funds - Global or International mutual funds mainly allow the investor
to include foreign equities into their investments.
Although deemed slightly riskier their values dotend to go up when domestic equities drop, offering a
balance to the investors portfolio.
Sector Funds - sector funds give the investor a way to focus on specific parts of the business world.
For example, niches like real estate, precious metals or financials. If an investor is able to tolerate
an amount of risk, they may end up benefiting from investing in this way. Particularly if the investorknows something about that market segment.
Fixed Income Funds - fixed income mutual funds tend to be less volatile. This is the right fund for
an investor who is looking for income? Fixed mutual funds for the most part are made up of bonds,CD's and money market funds. Yes, they do fluctuate with interest rates, still are a sound investment
for someone looking for an income generating portfolio.
Hybrid Funds - Hybrid mutual funds are generally made up of different investment sectors in one
mutual fund. For example, a usual mix may be the pairing of equities with Bonds or blue chip
stocks with riskier ones.
Index Funds - Index mutual funds imitate the selections and amounts of specified market indexes
like the S&P 500. They are generally unmanaged keeping costs down.
Enhanced Index Funds - Enhanced index funds are actively managed funds applying a portion of
their resources to outperform their benchmark indices.
Asset Allocation Funds - Asset allocation funds target investors who want a single product solution.
They are designed to invest across the primary asset classes including equities, fixed income
securities and money market. Each fund is allocated among different asset classes according to theirrisk tolerances.
Conservative Allocation Funds - Conservative allocation mutual funds are usually for investors
with a minimum five-year investment timeframe.
36
Domestic equity funds
Global funds
Sector funds
Fixed Income Funds Index Funds
Hybrid Funds
Asset Allocation Funds
Enhanced Index Funds
Conservative Allocation Funds
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MMutual funds provide investors with a way to diversify their
investment under professional management, which most
investors may not be able to obtain on their own. Since the
funds operate with a large pool of money, the investors benefit
from economies of scale, such as a lower trading cost and a
higher yield. Besides delivering attractive yields, many funds
provide their investors with such services as check-writing
privileges, custody (as a service), and bookkeeping. Investors
also benefit from the knowledgeable investment choices of
securities and investment objectives that funds