Written by The Banking Post
The Bangladesh Securities and Exchange Commission (BSEC) has repealed the two-decade-old Mutual Fund Rules, 2001, and cleared a draft of new regulations to restore confidence in the sector through better governance and stronger investor safeguards.
The decision was taken at a Commission meeting on Tuesday. In its statement, BSEC said the move comes in line with recommendations of the Capital Market Reform Task Force, which identified multiple flaws in the existing rules.
Over the years, the 2001 framework left significant loopholes that were exploited by some fund managers, allowing misuse of investors’ money. As a result, many mutual funds saw their asset bases erode, leaving investors and unit holders vulnerable.
Clearer rules, stronger checks
According to BSEC, the new draft rules are designed to establish clearer accountability across the sector. They specifically outline the responsibilities and duties of trustees, custodians, and asset managers, with an emphasis on safeguarding investors’ interests.
“The draft rules have been prepared to ensure good governance in the mutual fund sector and maximum protection for unit holders,” the regulator said in a press release.
BSEC added that the draft will now be published on its website and in national newspapers to invite public opinion before the final framework is implemented.
Restoring trust after repeated failures
Market insiders note that mutual funds were once considered a safe investment option for small investors, but weak oversight under the old rules allowed fund managers to take excessive risks. Several closed-end funds ended up with poor asset quality, failing to generate promised returns and eroding trust in the sector.
A senior BSEC official acknowledged that the reforms are aimed at regaining the confidence of both institutional and retail investors. “We cannot allow a repeat of past failures. The new framework will make fund operations more transparent and accountable,” the official said.
Margin rules also opened for opinion
At Tuesday’s meeting, the Commission also published the draft BSEC Margin Rules 2025, which had earlier been adopted, for public consultation.
BSEC spokesperson Md. Abul Kalam said: “We will soon publish the draft rules on our website and in newspapers to gather public opinion. Both the mutual fund and margin rules are open for feedback before final approval.”
Way forward
With the reforms, BSEC aims to rebuild investor confidence, create stronger checks on asset managers, and position mutual funds as a more reliable investment vehicle in Bangladesh’s capital market. The regulator hopes that a modernised rulebook will not only protect investors but also attract new participants to a sector that has long struggled with credibility issues.
