A Comparative Study on Legal Framework for Stock Dealer, Stock Broker & Authorize Representative. Focusing: Bangladesh & Malaysia

Topics: Stock market, Stock exchange, Stock broker Pages: 42 (10830 words) Published: April 8, 2011
Introduction . The report “Comparison of Stock Broker, Dealer, Authorized Representative -focusing Bangladesh & Malaysia” is based on putting light on the divergence of the functionality, qualifications, regulatory requirements, codes of conduct, scope of activities between the two countries. Whereas Bangladesh has a small capital market which is one of the smallest in Asia, Malaysia is one of the largest capital market in this region which started its development stage earlier than the crack of dawn of Bangladeshi capital market. So the scope and arena of the Malaysian market players and trading participants are wider in the foreign market also. Moreover the Malaysian trading intermediaries have a wider range of securities to deal with as the capital market takes hold strong positions in bonds, stocks and derivatives. A mentionable point about the Malaysian capital market is the Islamic financing system prevalent in the market which is regulated by the “Labuan Financial Services & Securities Act, 2010”. Hence, the differences between the trading intermediaries between the two countries exceed the similarities of the two. Bangladesh Capital Market - An Overview . Bangladesh capital market is quite small compared to both other regional markets and to the size of its economy. Though generally a capital market has two prongs, the stock market and the debt market, Bangladesh market has only stock market in active operation, as a debt market is still in its incipient stage. However, the stock market is also considerably small thanks to a conducive regulatory regime, lack of incentives and local business ethos. Among over 45,000 small and medium companies only 310 have become listed till April 30, 2007, of which 33 have been de-listed in the past 15 years. Now the number of securities that are traded is 228. There are also 186 treasury securities that are listed in Dhaka Stock Exchange. Though the governments tried their best to attract the growing private companies to turn their enterprises into public limited and get listed to reap benefits and avail incentives offered time to time, on average only 15 companies have joined the market each year. Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia region. It has two full- fledged automated stock exchanges namely Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and an over-the counter exchange operated by CSE. It also consists of a dedicated regulator, the Securities and Exchange Commission (SEC), since, it implements rules and regulations, monitors their implications to operate and develop the capital market. It consists of Central Depository Bangladesh Limited (CDBL), the only Central Depository in Bangladesh that provides facilities for the settlement of transactions of dematerialized securities in CSE and DSE. Dhaka Stock Exchange was set up on 28th April, 1954 that started formal trading on early1956. Post–independence government did not promote a capital market during the first five years, and it was activated again in 1976 with 9 issues on board. In 1995, a second bourse, the Chittagong Stock Exchange, was set up with sophisticated logistic support and modern management. Among the securities that are traded in DSE only two is corporate bonds. There are 218 stocks, 8 debentures, 186 treasury securities. With the small number of securities stock market is creating interest among the investors. Though most of the investors are illiterate in terms of analyzing the securities on the fundamental basis, there are steps taken by some intellectuals who try to reform the market in a constructive ways with their knowledge and experience. Total listed companies in DSE & CSE are 444 & 224 respectively. Capital Market of Malaysia: An Overview...
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