DSE for sound fund flow for stocks in MPS

Dhaka Stock Exchange has urged the Bangladesh Bank to declare capital market-friendly monetary policy that would ensure consistent liquidity flow in the market.

Bangladesh Bank will announce monetary policy statement for the second half of the current fiscal year 2018-2019 on January 30.
On January 22, the country’s premier bourse sent a letter to BB governor Fazle Kabir with a 7-point proposal for the interest of the capital market.

Officials of the bourse said banks’ single party exposure and stock market exposure limits squeezed liquidity flow at the stock market.
The central bank should announce its MPS so that it could not widen the wound in the market.

In the MPS, the premier bourse also appealed to emphasis the capital market as a mean of long term financing for the public, private and small capitalised companies rather than conventional bank loans, DSE said in the latter to BB.

DSE said that the bourse set to launch small capital board in the market. 

To accelerate the cash flow in the stock market, the DSE has also urged to consider a number of issues.

The Banking Companies Act 1991, which was amended in 2013, has restricted a bank’s stock market exposure on consolidated basis to 25 per cent of its capital. 

The banks’ capital includes paid-up capital, share premium, statutory reserve and retained earnings, the latter said.
Therefore, the bourse asked to calculate banks’ exposure on solo basis and exclude bonds, shares of non-listed companies, debentures and preferential shares, it said.

The BB should calculate banks’ stock market exposure limit at cost value.

Calculation of single party exposure related to the capital market institutions under the jurisdiction of the BB should be on cost basis instead of mark-to-market basis, the latter said.

Despite holding enough liquidity, financial institutions could not inject fund in the capital market due to BB’s market price-based valuation of banks’ investment in the stock market, a senior DSE official said.

It also requested to speed up the activities to launch trading of government treasury bonds in the market, he said.
Source: http://www.newagebd.net

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