Written by The Banking Post
A capital market taskforce has proposed the creation of a seven-member oversight body to strengthen regulatory accountability and protect the Bangladesh Securities and Exchange Commission (BSEC) from undue influence—particularly by the Ministry of Finance.
Oversight Framework and Composition
In its report submitted to the BSEC, the taskforce suggests that the body include:
- Governors of the Bangladesh Bank and the National Board of Revenue
- Secretary of the Financial Institutions Division (FID)
- Several independent capital market experts
The proposed entity would function like a board of directors, with a mandate to vet regulatory decisions and prevent government overreach. A legal framework is deemed essential to ensure the BSEC adheres to the committee’s instructions and recommendations.
Trigger for Reform: Missteps and Influence
The proposal follows recent political changes that opened scrutiny of past decisions, including:
- The Ministry of Finance’s 2018 extension of closed-end mutual fund tenures by 10 years, allegedly influenced by lobbying from fund managers.
- Asset managers continued charging fees on underperforming funds, eroding investor confidence.
- The BSEC’s dependency on ministry approval for publishing its annual reports, causing delays each year.
- IPO approvals—such as that of Ring Shine Textiles—despite objections from Dhaka Stock Exchange (DSE), which led to fund embezzlement.
- The controversial floor price policy, which dampened foreign investor sentiment.
Taskforce Recommendations
- Limit BSEC’s role to policy formulation; delegate operational decisions to stock exchanges.
- Establish a search committee, under the oversight body, to vet and nominate candidates for BSEC chairman and commissioner roles, countering politically motivated appointments.
- Ensure ministry engagement is balanced by including the FID Secretary in the oversight committee.
Legal Backing Essential
The taskforce stressed that past efforts—like the advisory committee formed after the 2010 market collapse—failed due to lack of legal mandate. That committee, which included experts like Dr. Mustafizur Rahman and Dr. Zaidi Sattar, met only once in 2014 and was eventually dissolved.
“To make this work, the oversight body must be backed by law,” said a taskforce member. “Otherwise, it risks becoming another symbolic gesture without functional power.”
Goal: Restoring Trust and Institutional Integrity
The taskforce’s move signals a broader call for transparency and institutional reform in Bangladesh’s capital market governance—aiming to prevent lobbying-driven disruptions and rebuild long-term investor trust.
