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Strong lobbying has begun for key positions at the country’s securities regulator, as the new government settles into office and prepares to reshape the leadership of the Bangladesh Securities and Exchange Commission.

Market operators and analysts say the appointments will be critical for restoring investor confidence in a capital market scarred by years of irregularities, policy missteps and weak oversight.

Before the election, the Bangladesh Nationalist Party pledged to appoint qualified professionals to regulatory posts to ensure capital market development. Now, stakeholders argue that the selection process must rigorously assess candidates’ integrity, management capacity and potential conflicts of interest.

“The government should make its own assessment and groundwork before appointing anyone,” said a market expert, who declined to pursue his own proposed nomination. “Some recommend names hoping to seek favour after appointments.”

Independence key to restoring trust

Interviewees stressed that the regulator must function independently, free from political or business influence. They said that while technical shortcomings can be addressed, integrity and leadership are indispensable.

Former BSEC chairman Faruq Ahmad Siddiqi said staying detached from vested interests helped him run the commission smoothly. At the same time, he noted that new appointees must remain accessible to ensure coordination among regulators and stakeholders.

A troubled recent past

Since the fall of the previous government on August 5, 2024, leadership at the commission has been unsettled.

The interim administration first appointed economist Dr M. Masrur Reaz as chairman. However, internal opposition within the regulator — reportedly linked to allegations of his association with controversial businessman Salman F Rahman — led to uncertainty, and he ultimately declined the post.

Later in August 2024, banker Khondoker Rashed Maqsood took charge as chairman. Insiders say his tenure has been marked by internal discord and management challenges.

“Maqsood distrusted almost all officials, which rendered the regulatory body almost non-functional,” said a BSEC staff member.

Under his leadership, the commission focused on penalties and rule reforms, but did not approve a single initial public offering (IPO). Protests erupted within the organisation over administrative actions, including forced retirements and officer-on-special-duty postings tied to past irregularities.

Stakeholders say the commission lacked the management capacity to unify staff and rebuild trust.

Echoes of earlier failures

Market participants also recalled past regulatory lapses that inflicted lasting damage.

After Faruq Ahmad Siddiqi’s tenure ended in 2009, Ziaul Haq Khondaker — then managing director of the Investment Corporation of Bangladesh — became BSEC chief. His tenure saw widespread rule violations, including excessive margin lending and questionable approvals of rights offers and asset revaluations.

Following the 2010–11 market crash, Prof M Khairul Hossain was appointed chairman. During his tenure, a wave of companies entered the market, many of which later became junk stocks.

One high-profile case was Ring Shine Textile. Despite objections from the Dhaka Stock Exchange over discrepancies in its financial statements, the IPO was approved. The company’s owners later fled the country after embezzling investors’ funds.

The Khairul-led commission also introduced a floor price mechanism and extended tenures of closed-end mutual funds — decisions critics say disrupted price discovery and hurt the mutual fund industry.

From 2020, under Prof Shibli Rubayat Ul Islam, the regulator continued imposing floor prices during the pandemic. Allegations also surfaced of favouring controversial market players such as Abul Khair Hiru and fund manager LR Global Bangladesh. Questions over potential conflicts of interest emerged after Shibli’s son became associated with an overseas company run by the chief executive of LR Global.

A crucial test for the new government

Saiful Islam, president of the DSE Brokers Association, said new commissioners must understand the market’s structural weaknesses and work to upgrade Bangladesh’s classification from frontier to emerging market.

Stakeholders believe the next leadership team must combine market knowledge, administrative skill and independence from vested interests.

They argue that dishonest officials should be held accountable, while capable and honest professionals should be empowered.

The BNP’s earlier stints in government between 1991–1995 and 2001–2006 are widely viewed by some market operators as relatively unblemished in terms of capital market management. Whether the new government can assemble a credible and competent team to revive the troubled yet vital sector now remains the key question.