SEC moves to discipline brokering

The stock market regulator has asked banks, other financial institutions and insurers to form separate subsidiaries to run brokerage and dealer activities.

The subsidiaries must be formed by March 31 next year, according to a decision taken by the Securities and Exchange Commission at a recent meeting.

“Brokerage activities have widened and so an institution may face problems running usual work and brokerage and dealer activities under the same management,” said Ziaul Haque Khondker, chairman of SEC.

Some 200 brokers and dealer are registered with Dhaka Stock Exchange: 32 run by banks, financial institutions and insurance companies.

Of the 32 brokerages, 16 are run by banks, while other financial institutions and insurance companies operate the rest.

The banks which have brokerages are: NCC Bank, Islami Bank, City Bank, Bangladesh Shilpa Bank, Bangladesh Commerce Bank, IFIC Bank, Dhaka Bank, Mutual Trust Bank, National Bank, Pubali Bank, Mercantile Bank, Shahjalal Islami Bank, Bank Asia, Premier Bank and AB Bank.

Some financial institutions already have separate brokerage houses. They are: Phoenix Securities, International Leasing and Financial Services, Equity Partners Securities, IDLC Securities, Green Delta Financial Services, ICB Securities Trading Company, LankaBangla Securities, SES Company and BLI Securities.

The other financial institutions and insurers with brokerage houses are Bangladesh Shilpa Rin Sangstha, Sadharan Bima Corporation, IIDFC and Popular Life Insurance.

In October, Bangladesh Bank directed commercial banks to form separate subsidiaries to operate merchant banking.

A bank will have to take permission from Bangladesh Bank to set up a subsidiary company for merchant banking. The banks -- already in merchant banking -- will have to turn their units into subsidiaries by January.