Stock brokers against regulator’s right in issuing new licences

The stock market regulator has no right to set the criteria for issuing new stock brokerage licences; rather, the bourses can exert their authority to do so as per the demutualisation rules, stock brokers said.

The regulator published the draft rules of Bangladesh Securities and Exchange Commission (Trading Right Entitlement Certificate), 2020 last month incorporating the criteria for issuing TREC and sought opinions from bourses within April 15.

In response, the Dhaka Stock Exchange has already given its consent to the rules.

DSE Brokers' Association yesterday sent a legal notice to the DSE, saying the bourse has given the consent "surreptitiously".

"How could the DSE give accord to the draft rules proposed by the stock market regulator which is bound to cause serious repercussions in the entire capital market?" read the legal notice sent by Law Valley Barristers & Advocates on behalf of the stock brokers.

The BSEC framed the draft rules without lawful jurisdiction as it has laid down criteria that includes fixation of fees, security deposit and time factor of issuance of the TREC, it said.

The regulator has no authority to determine the criteria, the timeframe of issuing TREC, fees and security deposit against new TREC, the association pointed out citing relevant rules.

"This is simply usurpation of power by the BSEC."

According to the demutualisation act, the bourse will set the criteria for giving TREC and will take approval from the regulator.

All the directors of the DSE as well as its company secretary received the legal notice, which called for sending a "note of protest" to the BSEC on the draft rules within seven days of receipt of the notice.

If they fail to issue the note of protest to the BSEC, the general members of the DSE shall be constrained to hold an extraordinary general meeting to remove all the directors of the DSE, it said.

A top official of the DSE confirmed that they received the legal notice and would take the next steps.

"The legal notice was not issued to us, so we have nothing to say about it," said an official of the BSEC, preferring not to be named.

Though the BSEC has no right to fix the criteria for issuing new stock brokerage licences, the DSE did not oppose the move of the regulator. Rather, it gave consent to the draft rules, said Kazi Firoz Rashid, a lawmaker and chairman of Kazi Firoz Rashid Securities, a stock broker.

"This is why we sent the legal notice," he said, adding that the BSEC published the draft rules in haste, which raises questions about the intentions of the regulator.