Written by The Banking Post
The Bangladesh Securities and Exchange Commission (BSEC) has proposed revamping the Capital Market Stabilisation Fund (CMSF) by introducing a dedicated law and restructuring its board to ensure investor protection and operational efficiency.
Following anomalies detected in the Fund’s operations under the previous regime, the new commission, formed after last year’s political transition, identified the need to make CMSF a statutory body through an ordinance or act. The BSEC submitted its proposal last month to the Financial Institutions Division (FID) of the finance ministry, seeking consent to consolidate previous rules and create a section specifically for the Stabilisation Fund.
Md. Abul Kalam, BSEC spokesperson, said the move aims to streamline operations and secure investors’ funds. Wasi Azam, head of operations at CMSF, stressed the urgency: “The formation of the board is very urgent as the management alone cannot take responsibility for the large amount of investors’ funds kept in the bank.”
The CMSF, set up in June 2021 to settle undistributed or unsettled dividends, currently holds Tk 8.13 billion in cash and Tk 10.92 billion in stock dividends in its beneficiary owner (BO) accounts. While it has disbursed cash dividends worth Tk 120 million and stock dividends worth Tk 2.38 billion, concerns were raised over the Fund’s lack of legal backing and high operating costs under its previous nine-member governing body. Reports indicated the former board held up to 10 meetings a month, with each member receiving Tk 8,000 per session.
To address these issues, BSEC has recommended a new seven-member board chaired by the BSEC chief, including members from the FID, the two bourses, the Investment Corporation of Bangladesh, the Bangladesh Association of Publicly Listed Companies, and the CMSF CEO in an ex-officio role. The regulator also proposed rationalising manpower and sharing office facilities with the BSEC’s Bangladesh Academy for Securities Market to reduce expenses.
Under the new framework, CMSF will not be allowed to invest in the equity market or issue loans using investors’ funds but can use its interest income for investor awareness programmes.
BSEC officials emphasized that these reforms are crucial to safeguarding investors’ money while maintaining the Fund’s core purpose of returning undistributed dividends rather than letting them remain indefinitely with issuing companies.
