BROKERAGE HOUSES : BSEC bins DSE plea for opening new branches

The Bangladesh Securities and Exchange Commission has turned down a Dhaka Stock Exchange’s plea that sought regulatory approval on opening new branches by all the brokerage houses in a bid to bring fresh fund in the capital market.
The capital market regulator made the decision at a commission meeting held recently, a BSEC official told New Age on Thursday.
The country’s premium bourse made the proposal based on opinion from the stockholders including Trading Rights Entitlement Certificate holders, a DSE official told New Age.
‘New branch opening permission needs to be allowed by the BSEC for all the brokerage houses as this will enable them to reach out to new customers and also bring fresh funds to the market,’ the DSE proposal said.
The BSEC official said, ‘The commission meeting held on Monday rejected the idea of the bourse considering the present market situation.’
‘The commission also observed that there will be no requirement of opening new branches once the bourse launches mobile based-trading system for investors,’ he said.
The DSE has been working on launching the mobile-based trading system that will allow investors to trade share directly without any involvement of any authorised dealer or representative.
The DSE managing director at a press conference in November said that the bourse would launch the mobile-based trading system by December this year.
Besides, the opening of new branches will make it more difficult for the brokerage houses, which are already suffering in paying salaries and expenses of its existing offices, to meet up additional cost, the BSEC official said.
The commission during the first quarter of the year allowed several brokerage houses, which have no branch except head office, to open new branch following instruction from prime minister Sheikh Hasina.
Since the market crash, the capital market regulator, following an instruction from the PM on February 22, 2011, asked the DSE not to propose for approval of any new branch.
Around 70 applications of brokerage houses, which have no branch except the head office, are now pending to get regulatory approval.
During the market bubble in 2009-2010, brokers took several steps including opening branches in different district towns to attract investors’ attention to the capital market.
Some of the brokerage firms even opened up to 15 branch offices during 2010.
According to the DSE data of 2011, 238 members of the bourse operated 634 branch offices across the country.
The number of branches was 388 in 2008.
As the brokerage commission fell sharply after the market crash due to decline in turnover, members of stock exchanges decided to close down brokerage houses that made huge number of people jobless.

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