Reassessing BSEC's Role: Prioritizing Investor Protection and Market Integrity

By Asif Khan, CFA

Chairman

EDGE AMC Limited

Posted on: 25 Aug, 2024


There has been a longstanding fundamental misunderstanding in Bangladesh about the role of BSEC. Frequently the leaders of BSEC had felt that their KPI is the index value. I.e. higher index value is success and lower a failure.

The reality is completely different. If we look at the objectives of the US SEC it gets very clear.

1. Protect investors: Protect investors from frauds, manipulations, pump and dump schemes, insider trading etc. Essentially ensuring a level playing field for all.

2. Maintain, fair, orderly and efficient markets: Let the market function properly. No artificial distortions like floor prices, forced buying. Leverage technology to make the transaction process smoother.

3. Facilitate capital formation: Allow capital raising in the form of debt and equity. This can extend to more sophisticated products also but the pure vanilla debt and equity products should be the critical ones.

For the new BSEC leadership in Bangladesh, the number one goal should be to regain trust. Trust has to be earned by punishing errant participants, correcting the laws that require immediate change and finally increasing the depth of the market by bringing in quality companies.

We need to just focus on the basics until we have perfected them.

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  • BSEC Bangladesh, investor protection, capital formation, market integrity, SEC objectives, stock market regulation, financial transparency, regulatory reforms, investor trust, market efficiency

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