Tour Report on Chittagong Stock Exchange (CSE) Ltd. P a g e | 42 Department of Finance & Banking, CU CSE Selective Categories Index (CSCX) Chittagong Stock Exchange (CSE) launched a new index named CSCX comprised A, B & G category companies from 14 th February 2004 to replace the earlier CSE Trade Volume Weighted Index. The new index includes all but not the Z categories companies. This also e xcludes the company‟s scrip which is debt securities, mutual fund, suspended for indefinite period and non- traded for preceding six months of review meeting. SWOT ANALYSIS Here a brief subjective evaluation of CSE is done in the form of SWOT:
Strength: The nationwide connectivity and recently the worldwide connectivity through the Internet is the superiority over the other stock exchange of Bangladesh. Efficient management and effective Corporate Governance gives CSE an edge over the competitor.
Weakness: CSE‟s operation is less effective due to the lack of professional attitude of the members, lack of Dhaka based member, non-availability of the dual listing facilities, small number of active members, regional image problem, etc.
Opportunity: With the growth of Internet users and government‟s interest in the capital market ushers new opportunity for CSE. As a member of SAFE, CSE will get the opportunity to trade regional (Sough Asian) shares in future.
Threat: New regulations of the different regulatory bodies (e.g. Government, SEC, Bangladesh Bank, etc.) change the trade volume in the exchange. Besides connectivity to the Internet also increased the security concern of the network.
Tour Report on Chittagong Stock Exchange (CSE) Ltd. P a g e | 43 Department of Finance & Banking, CU Chapter: 6
Problems and Recommendations PROBLEMS
Most of the members of CSE are not rendering optimum services to the investor‟s.
Lack of saving i.e. lack of capital formation.
Inadequate govt. assistance.
Some stock exchange members also serve as director of listed companies. This can lead to the chance of insider trading especially in such a poorly regulated market.
Some stock exchange members act only at brokers, i.e., they buy and sell on behalf of the clients on receipt of specified trading commission. They do not undertake the market making roles.
Stock market efficiency depends upon the availability of reliable and unbiased information about the capital issue and companies. Though existing provisions in the companies act ensure disclosure of adequate information though prospectus, but several defects are noticed in practice.
Raising the number of curb operators.
Inefficiency of the SECS to cape with the developments,
Lack of interest of institutional buyers such as banks, lease companies and insurance companies
Lack of proper and adequate disclosures
Certifiers of financial statements and Property values of the company are the identical
Management and Owners (Councilors) of CSE are entwined
Lack of enforcement with the compliance of rules and regulations
Corporate governance - sponsor-owners are managing the firm. All most all cases, no professional management are hired to run the affairs of the listed company.
Tour Report on Chittagong Stock Exchange (CSE) Ltd. P a g e | 44 Department of Finance & Banking, CU RECOMMENDATIONS TO REMOVE THE CSE’S PROBLEM 1. The dormant members of stock exchange should be surveyed very strictly. Such members should be compelled to either trade or give up their membership. 2. Market makers create both demand for & supply of securities and to the consistency in the prices. So it is recommended to make necessary provisions in stock exchange by laws for permitting market maker‟s activities. 3. To minimize the chances of insider trading legal provisions should be made that, no stock exchange member would be allowed to become directors of any listed company. 4. In Bangladesh, we should follow the practices of developed capital markets & not allow curb market anywhere. 5. The average investor must have access to all information that might help the right investment decision. SEC can institute either a set up or to encourage the formation of investors associations under its umbrella. 6. Increasing the govt. assistance and guidance can increase the efficiency of the organization. 7. By increasing honesty and commitment of concern authority can increase the investors‟ encouragement to invest in capital market. Credit rating enables the investors to judge the viability of the company for investment. Bangladesh capital market can accommodate some credit rating agencies.
Tour Report on Chittagong Stock Exchange (CSE) Ltd. P a g e | 45 Department of Finance & Banking, CU
CONCLUSION A healthy, strong and stable stock market is highly desirable. The quintessence from economic and political points of view is that continuous falling of share prices, unstable and shaky stock market, tarnishes the image, goodwill, creditability, reputation and popularity of the government in any country. With the dipping down of share prices, the hard-earned popularity of the government of any country is also depleted and diminished slowly but surely. At the end point of the report, we can say that the existing and potential sectors of investment of Bangladesh are certainly lucrative and prospective. If proper initiatives are taken by CSE it will provide huge contribution to the economy. CSE plays an important role in the investment of various Public Ltd. Investors feel secured investing through CSE as it offer to invest in the ready and strong sectors. Recently large companies are coming to IPO (Initial Public Offering) through conversion of public Limited company. If all the profitable sectors come to IPO CSE will play important in the overall investment sectors yet it has a great impact on investment through capital market.
Tour Report on Chittagong Stock Exchange (CSE) Ltd. Department of Finance & Banking, CU SOME ABBREVIATIONA BWS -Brokers Workstation CSE ─ Chittagong Stock Exchange IPO - Initial Public Offering
SEC ─ Securities & Exchange commission
MOP -Market Operation
NGTS -Next Generation Trading System
SEC ─ Securities & Exchange commission
T+O ─ Trading day
T+1 ─ Trading day + The following day
T+2 ─ Trading day + The successive 2 days
T+3 ─ Trading day + The successive 3 days
T+4 ─ Trading day + The successive 4 days
T +9 ─ Trading day + The successive 9 days AGM ─ Annual General Meeting
BO ─ Beneficiary Owner
