Written by The Banking Post
Stockbrokers have called for a major revision of the demutualisation framework of the Dhaka Stock Exchange (DSE), demanding a reduction in the influence of independent directors on the exchange’s board.
In a formal letter to Dr. Anisuzzaman Chowdhury, Chairman of the Capital Market Development Committee and Special Assistant to the Chief Adviser, the DSE Brokers Association of Bangladesh (DBA) proposed downsizing the board from 13 to 11 members by eliminating two independent directorships. The letter was also sent to the Bangladesh Securities and Exchange Commission (BSEC) and the DSE chairman.
The brokers made their demands public through a press release on Saturday, urging a comprehensive review and amendment of the current governance structure laid out in the demutualisation scheme implemented in 2013.
Under the existing framework, the DSE board comprises 13 members—seven independent directors, four shareholder directors, one nominee from the strategic investor, and the managing director (ex-officio). The chairperson must be selected from among the independent directors.
The DBA contends that this structure lacks balance and has, in previous political regimes, allowed appointments based on political affiliations rather than market expertise. The letter alleges that several independent directors were outsiders to the capital market and lacked the requisite knowledge, which hindered effective decision-making and overall market development.
“Many of these independent directors made decisions that did not reflect the interests of stakeholders, undermining market discipline and investor confidence,” the DBA stated, warning of similar risks under future political administrations.
The association’s proposed model includes five independent directors, four shareholder directors, one strategic investor nominee, and the managing director. Notably, it recommends that the chairperson be elected from any board member except the MD, through a vote in the board’s first meeting after reconstitution.
Beyond board restructuring, the DBA called for two other significant reforms.
First, it seeks greater authority for the managing director, arguing that the current arrangement—where the Chief Regulatory Officer (CRO) reports solely to the Regulatory Affairs Committee—creates a disconnect between regulatory affairs and DSE’s executive leadership. The DBA proposes that the CRO report to both the MD and the committee to ensure better communication and coordination.
Second, the brokers demanded flexibility in DSE’s organisational structure. The current demutualisation scheme enforces a fixed organogram, which the DBA believes restricts the exchange’s adaptability. Removing this rigidity would enable the DSE to function more efficiently as a self-regulatory organisation.
The demutualisation scheme was introduced to curb broker dominance following the 2010 stock market crash, which revealed widespread manipulation and conflicts of interest. It separated ownership from management, giving more control to independent directors to safeguard transparency and accountability.
However, over a decade later, the DBA is seeking a partial reversal—arguing for a more balanced and pragmatic approach that reflects evolving market realities and ensures the sustainable development of Bangladesh’s capital market.
