Both the local bourses termed some recent government decisions relating to IPO and mutual funds 'anti-market' saying that it would discourage the new companies aiming to list with the stock exchanges.
At a meeting on November 5 last the finance ministry took decisions that a public limited company must offload shares accounting for minimum 40 per cent of its paid-up capital through initial public offering (IPO) and the securities regulator allow more mutual funds in the market in phases.
"The decisions are anti-market," said Rakibur Rahman, president of the Dhaka Stock Exchange, at a press conference after a joint meeting of the DSE and the Chittagong Stock Exchange (CSE) on the day.
"We don't agree with your decisions, which will just discourage other companies planning to list with the bourses and lead to depletion of the supply of fresh shares into the market, when the demand for new issues is rising day by day," Mr Rahman said.
"The stock market is very sensitive," he said adding that the decision should have been taken in consultation with the stakeholders for betterment of the market.
The decision relating to IPO floatation also contradicts the book-building method, that says a company will go public with shares equivalent to 10 per cent of its paid-up capital, or Tk 300 million, whichever is higher, he said.
"Let the book-building method take its own course. Please, don't disturb the regulations," he said.
He recommended that a public limited company having a paid-up capital below Tk 5.0 billion offload minimum 25 per cent shares and a company with paid-up capital above Tk 5.0 billion offload 15 per cent shares.
"There should be pre-IPO placement. Imposition of the lock-in period might be one year," he said.
"Grameenphone offered only 10 per cent of its paid-up capital through its IPO. If it offered shares accounting for 40 per cent of its paid-up capital, the IPO might have been under-subscribed. So, a market always requires a gap between the demand and the supply for execution of buying and selling," he added.
On uniform face value and market lot, the DSE president said, "We are not against this decision, but it should be decided after sitting with the Securities and Exchange Commission (SEC), the DSE and the CSE."
He was also critical of the slow SEC process of giving approval to mutual funds.
The finance ministry advised the SEC to allow mutual funds in the market in phases to see the impact of their entry into the market.
"We are seriously against it as mutual funds managed by professionals help stabilise the market," the DSE boss said.
But the mutual fund rules say the SEC will have to give the nod for registration of a mutual fund within 30 days, he pointed out.
About Direct Listing Regulations, he said the joint committee of the bourses would discuss the issue further.
However, the DSE and CSE hailed the finance ministry decision on setting up a separate bench for quick disposal of the cases remaining pending with the High Court for years.
"Amendment to some securities rules to bolster the market and make it vibrant is a time-befitting decision," said the DSE president.
CSE President Fakhruddin Ali Ahmed, DSE senior vice president Saiful Islam and other high officials of the bourses were present at the press conference.
At a meeting on November 5 last the finance ministry took decisions that a public limited company must offload shares accounting for minimum 40 per cent of its paid-up capital through initial public offering (IPO) and the securities regulator allow more mutual funds in the market in phases.
"The decisions are anti-market," said Rakibur Rahman, president of the Dhaka Stock Exchange, at a press conference after a joint meeting of the DSE and the Chittagong Stock Exchange (CSE) on the day.
"We don't agree with your decisions, which will just discourage other companies planning to list with the bourses and lead to depletion of the supply of fresh shares into the market, when the demand for new issues is rising day by day," Mr Rahman said.
"The stock market is very sensitive," he said adding that the decision should have been taken in consultation with the stakeholders for betterment of the market.
The decision relating to IPO floatation also contradicts the book-building method, that says a company will go public with shares equivalent to 10 per cent of its paid-up capital, or Tk 300 million, whichever is higher, he said.
"Let the book-building method take its own course. Please, don't disturb the regulations," he said.
He recommended that a public limited company having a paid-up capital below Tk 5.0 billion offload minimum 25 per cent shares and a company with paid-up capital above Tk 5.0 billion offload 15 per cent shares.
"There should be pre-IPO placement. Imposition of the lock-in period might be one year," he said.
"Grameenphone offered only 10 per cent of its paid-up capital through its IPO. If it offered shares accounting for 40 per cent of its paid-up capital, the IPO might have been under-subscribed. So, a market always requires a gap between the demand and the supply for execution of buying and selling," he added.
On uniform face value and market lot, the DSE president said, "We are not against this decision, but it should be decided after sitting with the Securities and Exchange Commission (SEC), the DSE and the CSE."
He was also critical of the slow SEC process of giving approval to mutual funds.
The finance ministry advised the SEC to allow mutual funds in the market in phases to see the impact of their entry into the market.
"We are seriously against it as mutual funds managed by professionals help stabilise the market," the DSE boss said.
But the mutual fund rules say the SEC will have to give the nod for registration of a mutual fund within 30 days, he pointed out.
About Direct Listing Regulations, he said the joint committee of the bourses would discuss the issue further.
However, the DSE and CSE hailed the finance ministry decision on setting up a separate bench for quick disposal of the cases remaining pending with the High Court for years.
"Amendment to some securities rules to bolster the market and make it vibrant is a time-befitting decision," said the DSE president.
CSE President Fakhruddin Ali Ahmed, DSE senior vice president Saiful Islam and other high officials of the bourses were present at the press conference.
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