To implement this plan, the bourse, through a letter sent in mid-August, requested the stock market regulator, BSEC, to amend the Depository (User) Regulations 2003 to allow trading on record dates with a minimum spot trading period, as well as to amend the Settlement of Transactions Regulations 2013.The Dhaka Stock Exchange (DSE), the country’s premier bourse, plans to end the current suspension of stock trading on record dates to improve market efficiency, reduce disruptions, and align its operations and regulations with global standards.
To implement this plan, the bourse, through a letter sent in mid-August, requested the stock market regulator, Bangladesh Securities and Exchange Commission, to amend the Depository (User) Regulations 2003 to allow trading on record dates with a minimum spot trading period, as well as to amend the Settlement of Transactions Regulations 2013.
In Bangladesh, on the record date – the cutoff determining which shareholders qualify for AGM/EGM voting and are entitled to dividends, rights, or bonus shares – trading of stocks for which the record date is declared does not occur.
Under the new plan, for securities traded on the record date, the seller will be entitled to receive corporate benefits as they hold the shares, while buyers will not be entitled to any corporate benefit.
The plan will adopt one-day spot trading (T+1) settlement before the record date, with securities settlement (pay-in) on a T+1 basis for record date trades; default management will handle T+2, according to the letter.
The DSE believes the reforms will bring transformative benefits to the capital market and align the operational and regulatory framework with global standards.
Minhaz Mannan Emon, a shareholder director at the DSE, thanked the capital market regulator and the current DSE board, saying, “This initiative will elevate the capital market to international standards. In other countries, shareholders can be determined on record dates without suspending trading. It is merely a technical matter, which, if changed, can also be implemented in our market.”
He added, “Keeping trading active without suspension will increase transactions and liquidity in the country’s capital market. Currently, with 365 listed companies, if each company’s shares remain suspended for one day, it would require 365 days. But in practice, there are only around 220–225 trading days in a year. As a result, multiple companies’ shares remain suspended on the same day, reducing turnover and depriving investors of trading opportunities.”
He expressed hope that if the new plan is approved, turnover will increase and investors will be able to continue trading shares, bringing the bourse closer to international standards.
Trading suspension disrupts market continuity
The DSE has proposed ending the suspension of securities trading on record dates for AGMs and EGMs, citing disruptions to market continuity, reduced stakeholder earnings, and limited trading opportunities for investors.
In most regional and global markets, trading continues uninterrupted on the record date through a cum-benefit and ex-benefit framework, without suspending trading, the letter stated.
To improve efficiency around corporate actions, the DSE recommended adopting a cum-benefit and ex-benefit framework, implementing one-day spot trading (T+1 settlement) before record dates, and moving pay-ins for record date trades to a T+1 basis instead of T+0.
The proposal also includes introducing cash settlement for shortages detected on T-2 and maintaining a centralized record date calendar integrated within the CNS system, accessible via flat file or API.
Confirming the feasibility of the plan, the DSE letter stated that Central Depository Bangladesh (CDBL) confirmed T+1 pay-ins for record date trades are technically possible.
“Back-office vendors, including AdaSoft and Quant Fintech, have expressed readiness for the transition and recommended standardized record date files to minimize manual errors. OMS vendors also indicated they can integrate the necessary changes within a short timeframe,” the letter added.
Under the proposed implementation plan, the exchanges will update the Clearing and Settlement system to reflect 1+1 pay-in dates and maintain a centralized dividend/record date calendar for stakeholders.
DBA President Saiful Islam said, “In recent years, the supply of quality shares in the capital market has not increased, which has caused the market to contract instead of expand.
Moreover, due to record dates for dividends or annual general meetings, trading of listed companies’ shares remains suspended for a day each year. This reduces overall market transactions and deprives investors of trading opportunities.”
He added, “It is possible to determine a company’s eligible investors without any trading suspension, a practice followed by stock exchanges in developed countries. If such a system is introduced in our capital market, investor activity will increase.”
Source: The Business Standard
Read More at: csslbd.net
