Appraisal of DSE & CSE

Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) are the two Bangladeshi

stock exchanges doing their operation in Dhaka and Chittagong. Like other countries stock

exchange they are doing there operations under Security Exchange Commission (SEC). DSE and

CSE are doing a job of a middleman in the financial world. They provide the surplus unit to lend

money where as to the deficit unit to borrow money. In short the DSE and CSE are doing a job

that links the surplus unit to the deficit unit. In this term paper we are going to talk about the

appraisal of DSE and CSE. First of all, we will talk about the background of these two giant

stock exchanges along with that we will talk about the enrollment procedure of DSE and CSE.

As we know that for every company who wants to enroll in stock exchange they must first list

their name in the stock exchange so, we will briefly discuss about the listing procedures too.

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1.1 The origin of the report:

This term paper is prepared for Md. Lutfur Rahman, Assistant Professor and Assistant Proctor,

Department of Business Administration of East West University. This term paper is prepared as

a partial requirement of FIN-335 (Financial Institutions and Markets) course for the semester of

summer 2011.

1.2. Objective of the study

Here we have only looked at the “Appraisal of DSE and CSE”. So the specific objectives are-

To give detailed information about DSE and CSE.

To focus on the major activities of DSE and CSE.

To know how they operate in our country.

To know briefly about their rules and regulation. And

Their performance in our country.

1.3. Scope of the study

Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) is the only two stock

exchange we have in our country and for that we can easily get as much as information we need.

Here we discuss about the basic idea of DSE and CSE along with that we will discuss about the

performance of these two giant stock exchanges and then we will talk about some extra-ordinary

features of these two stock exchanges.

1.4. Methodology

The report is based on information collected from secondary source of data, by using DSE and

CSE web sites. Along with that we consulted with our Hon’ able course instructor. The data

collected from the some other sources too. These ares-

Dhaka Stock Exchange Monthly Review

Chittagong Stock Exchange Monthly Review

CSE portfolio.

1.5. Limitations of the study

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The major limitations encountered are:

Lack of experience has acted as constraints in the way of meticulous exploration on the

topic.

Time wasn’t enough to complete such a complicated topic.

Relevant papers and documents were not available sufficiently. In many cases up to date

information is not available.

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2.1 Beginning of DSE and CSE

Bangladesh has two Stock Exchanges, Dhaka Stock Exchange (DSE), where trading is

conducted by Computerized Automated Trading System and Chittagong Stock Exchange (CSE),

which is also conducted by Computerized Automated Trading System . All exchanges are self-

regulated, private sector entities which must have their operating rules approved by the SEC. The

Securities and Exchange Commission (SEC) was established on 8th June, 1993 under the

Securities and Exchange Commission Act, 1993. The Chairman and Members of the

Commission are appointed by the government and have overall responsibility to administer

securities legislation. The Commission, at present has three full time members, excluding the

Chairman. The Commission is a statutory body and attached to the Ministry of Finance. 

Dhaka Share Market consists of the Dhaka Stock Exchange or DSE, the main share market of

Bangladesh. DSE is situated at the main market place of Dhaka, capital of Bangladesh, called

Motijhil. Dhaka Share Market formally started its trading in the year 1956 even before the

formation of Bangladesh as a country. Dhaka Share Market is still at its infant stage and has to

walk a long way for coming into the radar of the Global Financial Market. The Chittagong

Stock Exchange (CSE) began its journey in 10th October of 1995 from Chittagong City through

the cry-out trading system with the promise to create a state-of-the art bourse in the country.

Founder members of the proposed Chittagong Stock Exchange approached the Bangladesh

Government in January 1995 and obtained the permission of the Securities and Exchange

Commission on February 12, 1995 for establishing the country's second stock exchange. 

Stock Exchanges are mutual organization that facilitates trading of company stocks and

securities to the stock brokers and traders. The stock exchanges deals with the issue of securities

and other financial instruments. The stock exchanges also involves in the payment of income and

dividends. The role of the stock exchange is to raise capital for businesses, mobilize savings for

investment, facilitate company growth, and redistribute wealth as well as raising capital for

financing the development projects of the government.

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2.2 Legal Basis

The Dhaka Stock Exchange (DSE) is registered as a Public Limited Company and its activities

are regulated by its Articles of Association rules & regulations and bye-laws along with the

Securities and Exchange Ordinance - 1969, Companies Act - 1994 & Securities & Exchange

Commission Act - 1993.

As legal entity CSE is a not-for-profit public limited company. All of its 129 members are

corporate bodies. It has a separate secretariat independent of policymaking Board. The Board

comprises of brokers and non-brokers directors with equal proportion to ensure the transparency.

The Board constituted Committees to delegate such functions and authority as it may deem fit.

There is an independent secretariat headed by a full time Chief Executive Officer. CSE activities

are regulated by its own regulations and bye laws along with the rules, orders and notification of

the SEC.

2.3 Organizational Structure of DSE and CSE

Fig: Organizational Structure f DSE and CSE

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2.4 Objectives of DSE and CSE

2.4.1 Objectives of Dhaka Stock Exchange

Listing of Companies (As per Listing Regulations).

Providing the screen based automated trading of listed Securities.

Settlement of trading (As per Settlement of Transaction Regulations).

Gifting of share / granting approval to the transaction/transfer of share outside the trading

system of the exchange (As per Listing Regulations 42).

Market Administration & Control.

Market Surveillance.

Publication of Monthly Review.

Monitoring the activities of listed companies (As per Listing Regulations).

Investor’s grievance Cell (Disposal of complaint bye laws 1997).

Investors Protection Fund (As per investor protection fund Regulations 1999).

Announcement of Price sensitive or other information about listed companies through

online.

2.4.2 Objective of Chittagong Stock Exchange

Develop a strong platform for entrepreneurs raising capital;

Provide a fully automated trading system with most modern amenities to ensure: quick,

easy, accurate transactions and easily accessible to all.

Undertake any business relating to the Stock Exchange, such as a clearing house,

securities depository center or similar activities;

Develop a professional service culture through mandatory corporate membership;

Provide an investment opportunity for small and large investors;

Attract non-resident Bangladeshis to invest in Bangladesh stock market;

Collect preserve and disseminate data and information on stock exchange;

Develop a research cell for analyzing status of the market and economy.

2.5 Listing Procedures in Stock Exchange

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Listing requirements are the set of conditions imposed by a given stock exchange upon

companies that want to be listed on that exchange. Such conditions sometimes include minimum

number of shares outstanding, minimum market capitalization, and minimum annual income. It

is obvious that the listing procedure of all company’s in either DSE or CSE follows same

procedures. Any company who wants to list their name in the stock exchange they must have to

go through the Initial Public Offerings (IPO). The listing requirement that have been prescribed

by the SEC is based on the following criteria’s-

Every company intending to enlist its securities to DSE by issuing its securities through

IPO is required to appoint Issue Manager to proceed with the listing process of the

company in the Exchange;

The Issue Manager prepares the draft prospectus of the company as per Public Issue

Rules of SEC and submit the same to the SEC and the Exchange(s) for necessary

approval;

The Issuer is also required to make agreement with the Underwriter(s) and Bankers to the

Issue for IPO purpose;

After receiving the draft prospectus, the Exchange examine and evaluate overall

performance as well as financial features of the company which may have short term and

long term impact on the market;

The Exchange send its opinion to SEC within 15 days of receipt of draft prospectus for

SEC's consideration;

After proper scrutiny, SEC gives it consent for floating IPO as per Public Issue Rule;

Having consent from SEC, the Issuer is required to file application to the Exchange for

listing its securities within 5 days of issuance of its prospectus;

On successful subscription, the company is required to complete distribution of

allotment/refund warrants within 42 days of closing of subscription;

After 100% distribution of shares/refund warrants and compliance of other requirements,

the application for listing of the Issuer is placed to the Exchange's meeting for necessary

decision of the Board ;

2.6 DSE and CSE INDICES

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There are three categories for the DSE indexes. These are –

DSI: DSI represent the DSE all Share Price index for the Dhaka Stock

Exchange (DSE).

DGEN: It represents the General Index of DSE. This includes the all stocks of

the DSE except the “Z” categories.

DSE 20: DSE 20 is an index where the best twenty stocks are listed. The best

twenty performing stocks information, movement, overall information is

provided here.

There are two types of CSE index. These ares-

CSE 30: CSE 30 is an index where the best thirty stocks are listed. The best

thirty performing stocks information, movement, overall information is

provided here.

CSCX: It represents the Chittagong Special Categories Index. Here all the stock

including the Z category stock is also included.

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3.1 DSE MILESTONES

Milestones of DSE

Incorporated as East Pakistan Stock Exchange Association Limited 28 April, 1954

Starting Formal Trading 1956

Re-name as East Pakistan Stock Exchange Ltd. 23 June, 1962

Re-name as Dacca Stock Exchange Ltd. 13 May, 1964

Trading Restarted in Bangladesh 16 August, 1976

Starting of DSE all Share Price Index Calculation 16 October, 1986

DSE all share Price Index Calculation Started on the Basis of IFC designed Formula

1 November, 1993

Starting of Automated Trading 10 August, 1998

Starting of DSE 20 Index 1 January, 2001

Starting of CDS 24 January, 2004

Starting of GOVT. Bond Market 01 January, 2005

DSE All Share Price Index Re-introduced 28 March, 2005

Direct Listing (Dhaka Stock Exchange Ltd.)Regulation 2006 Introduced 12 March, 2006

DSE Chittagong Office Inaugurated 22 November, 2007

DSE Sylhet Office Inaugurated 30 March, 2008

Book-Building Method Has Been Introduced 2010

3.2 DSE Main Board

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The DSE main board includes the number of listed securities, companies, mutual funds treasury

bonds and corporate bonds. The following table will show the Number of Shares/ Certificate

issued and amount, issued capita, total market capitalization and conversion rate of these of DSE.

Main Board as on December 2010

Total Number of Listed Securities 445

Total Number of Companies 218

Total Number of Mutual Funds 31

Total Number of Debentures 8

Total Number of Treasury Bonds 186

Total Number of Corporate Bonds 2

Total number of Shares/Certificates: (No. in mn)

Total Number of Shares & Mutual Fund Certificates of All Listed Securities*

14,419

Total Number of Shares of All Listed Companies 12,335

Total Number of Certificates of All Listed Mutual Funds 2,075

  (No. in ' 000)

Total Number of All Listed Debentures 409

Total Number of All Listed Gov. T-Bonds 4,213

Total Number of All Listed Corporate Bonds 4,336

Total Issued Capital of : (Figure Tk.in mn)

(FigureUS$ in mn)

All Listed Securities 664,242 9,404.53

All Companies Shares 216,487 3,065

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All Mutual Funds 21,066 298

All Debentures 140 2

All Listed Govt. T-Bonds 422,213 5,978

All Listed Corporate Bonds 4,336 61

Total Market Capitalization of: (Figure Tk.in mn)

(FigureUS$ in mn)

All Listed Securities 3,471,109 49,145

All Listed Companies Shares 3,001,334 42,494

All Listed Mutual Funds 43,064 610

All Debentures 576 8

All Listed Govt. T-Bonds 422,213 5,978

All Listed Corporate Bonds 3,922 56

Conversion Rate: BDT against USD 70.63

3.3 DSE clearing and Settlement Process

The Clearing and Settlement module provides the management of trade from the point of entry

into the Settlement Pool trade database until it has been delivered, settled and removed from the

Settlement Pool. It consists of three major business processes.

Clearing: participant trade reporting, affirmation, billing and assigning settlement instructions.

Settlement: the process of overseeing that delivery of all instruments to the buyer and payment

of all moneys to the seller has occurred before removing the trade from the settlement pool.

Regulation 4 of the Settlement of Stock Exchange Transactions Regulation 1998 has been given

effect time to timeHere is a complete picture of the settlement system for all of our 427

Instruments in Five (5) groups in the Four (4) markets.

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A Group: Number of Instruments are 338 (150 + 8D + 22M + 158TB), Here D for Debentures,

M for Mutual funds & TB for Treasury Bonds (Trading in Public, Block & Odd-lot Market with

trade for trade settlement facility for scrip only through DSE Clearing House on T+1, T+3 basis).

"A" and "DA" are marked in BASES columns for Non-Demat & Demat instrument respectively

in our TESA Trading Software.

Fig: Clearing and Settlement -01

B Group: Number of Instruments are 44(Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "B" and "DB" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

G Group: Number of Instrument is 0 (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "G" and "DG" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

N Group: Number of Instrument is 11(Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "N" and "DN" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

The above cycle is valid for A, B, G & N category instruments traded in Public, Block & Odd-lot market.

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Z Group: Number of Instruments are 34(Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+9 basis). "Z" and "DZ" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

Fig: Clearing and Settlement-02

This cycle is valid only for Z group instruments traded in Public, Block & Odd-lot market.

3.4 DSE Performance

Dhaka Stock Exchange (DSE) is a center for lending and borrowing money. Based on that

lending and borrowing money we can evaluate the performance of the DSE. Let’s look at some

data of DSE which is for January-December 2010-

DSE Performance: January, 2010 to December, 2010

Month

For 2010

DSE Turnover Ratio of

Mkt.

Capital To

Trn.

Index

Value

(Tk in

mn.)

Value

(in mn.)

DSI DGEN DSE 20

JAN 262869.41 1020.70 0.12 4422.81 5367.11 3030.19

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FEB 249982.12 953.64 0.11 4549.60 5560.56 2992.93

MAR 175115.99 747.99 0.08 4573.81 5582.33 2952.01

APR 191303.18 700.63 0.08 4641.54 5654.88 3039.17

MAY 386238.36 1013.99 0.08 5030.05 6107.81 3432.23

JUN 387733.65 1203.94 0.14 5111.63 6153.68 3650.04

JUL 322769.28 1163.22 0.11 5278.89 6342.76 3721.78

AUG 394438.07 1793.43 0.13 5555.49 6657.97 3874.50

SEP 312562.35 1602.83 0.10 5930.90 7097.38 4137.93

OCT 468008.97 2265.35 0.14 6612.14 7957.12 4533.18

NOV 471717.20 2233.33 0.13 7135.16 8602.44 5119.13

DEC 387174.09 2275.47 0.11 6877.66 8290.41 5204.98

The performance of the DSE is shown in an index moving graph-

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INDEX MOVEMENT-2010

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

DS

E I

ND

ICE

S

Series1 Series2 Series3

Graph 01: Index Movement for the Year 2010

As we can see that the index movement for 2010 is so so with respect to time. Here series 1 is

the DSE 20 index which starts from a lower scale and then it goes upward at the very end of the

year. Series 2 represents the index of DGEN where all companies are listed except the “Z”

categories. Its index is pretty good. It range from the 5000-8000 for the month January-

December in the year 2010

3.5 DSE Market Outlook

We have collected a data on market outlook of the DSE for the year of 2005-2011. The data we

have collected will clarify a general view of the DSE for these years.

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DSE MARKET OUTLOOK

Item Unit 2005-

06

2006-07 2007-08 2008-09 2009-10 2010-11

Exchange

Turnover

TK.

Crore

4599.35 16467.4 54323.9 89378.92 256350.5 235667

Foreign Trade

Turnover at

DSE

TK.

Crore

68.56 989.53 1922.42 1183.92 1869.85 1889.54

Market

Capitalization

TK.

Crore

21542.1 47585.5 93102.5 124133.8 270074.4 350800.5

Simple Weight

Avg. Dividend

Percent 15.92 16.37 19.54 21.78 28.72 21.00

Market Yield Weighte

d Avg.

4.15 2.85 1.94 2.17 1.70 1.56

Market PE Weighte

d Avg.

10.66 17.28 22.80 18.44 24.08 29.16

Market Capt. to

GDP (Ratio)

Percent 5.18 10.18 17.18 20.19 43.92 50.67

3.6 Most Active Members in DSE

In every quarter the members of DSE change. The members of DSE has to perform well with

there organizational performance. The most active member of DSE will be chosen from those

criteria. In a survey we found that the most active members in DSE in December, 2010 are-

Most Active Members-December, 2010

SL. Name Member Member Position in

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No. Number Code Dec, 10 Nov, 10

1 LankaBangla Securities Ltd. 132 DSELAN 1 1

2 ICB Securities Trading Co. Ltd 129 DSEIST 2 2

3 PFI Securities Ltd. 079 DSEPFI 3 4

4 BRAC-EFL Stock Brokerage 011 DSEEPL 4 6

5 IDLC Securities Ltd. 058 DSEISL 5 5

6 AL-Arafah Islami Bank Ltd. 234 DSEAIB 6 3

7 MTB Securities Ltd. 197 DSEMTB 7 10

8 Multi Securities & Services Ltd 075 DSEMUL 8 8

9 AB Securities Ltd. 201 DSEABF 9 21

10 BLI Securities Ltd. 175 DSEBLI 10 20

11 International Leasing 009 DSEILS 11 11

12 Shahjalal Islami Bank Ltd. 233 DSESJB 12 9

13 Wifang Securities Ltd. 210 DSEWSL 13 12

14 National Bank Ltd. 203 DSENBL 14 7

15 Bank Asia Ltd. 237 DSEBAL 15 13

16 I. & I. Dev. Fin. 238 DSEIID 16 14

17 . NCC Bank Ltd. 061 DSENCC 17 15

18 CMSL Securities Ltd. 113 DSECAM 18 16

19 Mercantile Bank Ltd 224 DSEMBL 19 18

20 SES Company Ltd. 163 DSESES 20 17

3.7 Total Turnover of DSE in 2009-10

The total turnover of all the listed securities at the Dhaka Stock Exchange Limited has stood at

Tk 2563.50 billion on 30 June, 2010, which was Tk 893.79 billion on 30 June, 2009. Total

turnover at the premier bourse of the country has risen by 186.81 per-cents in 2009-10 compared

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with 2008-09 fiscal year. On the other hand, in 2009-10 periods a total of 10,132.88 million

securities have been traded at the Dhaka Stock Exchange Limited against 5,757.86 million

registering 75.98 per-cent rises over the corresponding period of time.

3.8 Sectoral Performance in DSE

The sectoral performance of DSE has been created on the basis of the different sectors of DSE.

These are Financial Sector, Manufacturing, Service and Miscellaneous, and Bond. The market

capitalization Taka in million are given along with the November and December, 2010 data with

the percentage. On the other part we have included the turnover of DSE in November and

December 2010 along with that the Percentage is also given of the total turnover.

DSE Sectoral Performance December, 2010Sector Mkt. Capitalisation Tk. In Million Turnover Tk. In Million

Dec, 10 Nov, 10 % of M.

Capital

Dec, 10 Nov, 10 % of Total

TurnoverFINANCIAL SECTOR

Banks 1000969.48 922523.59 32.66 157080.73 183519.73 40.57Financial Inst. 390533.99 394603.50 12.74 41644.50 64678.16 10.76

Insurance 182685 188402.12 5.96 32980.96 50819.21 8.52Mutual Funds 44457.56 36513.10 1.45 13588.82 8117.11 3.51

Total 1618646.03 1542042.30 52.81 245294.92 307134.22 63.36MANUFACTURING

Foods 64976.26 65146.44 2.12 29013.95 8280.25 1.78Pharmaceuticals 205748.74 224008.34 6.71 6899.15 15779.85 3.21

Textile 125548.09 125792.28 4.10 12426.17 28487.96 7.49Engineering 137274.84 124196.89 4.48 19197.53 8664.17 4.96

Ceramics 55234.36 58757.29 1.80 1010362 34.73 2.61Tannery 16715.64 18682.10 0.55 1792.68 137.06 0.46

Paper & Printing 1261.60 1271.10 0.04 75.04 13256.35 0.02Jute 1058.99 1342.68 0.03 190.98 22366.16 0.05

Cement 72990.84 77454.72 2.38 6111.73 3913.21 1.58

Total 680809.36 696651.83 22.21 85810.86 100919.40 22.21

SERVICE & MISCELLANEOUS

Fuel & Power 294353.64 320578.69 9.60 27095.45 34118.94 7.00

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Service & Real Estate

30179.58 35049.48 0.98 2537.90 4030.774 0.66

IT 5259.32 4086.90 0.17 1301.70 1450.42 0.34

Telecommunication 331903.75 316915.42 10.83 7856.98 3786.23 2.03

Travel and Leisure 15477 14858.00 0.50 5191.26 2415.53 1.34

Miscellaneous 84639.55 88292.15 2.76 11982.33 17801.00 3.09

Total 761812.84 779507.63 24.85 55965.62 63602.86 14.45

BOND

Corporate Bond 3922.28 3822 0.13 90.73 60.63 0.02

Total 3922.28 3822 0.13 90.73 60.63 0.02

Grand Total 3065190.51 3022024.17 100 387174.09 471717.11 100

3.8 IPO Scenario

A total of 18 companies floated IPO’s worth TK. 26536.59 million in 2010 while the number of

IPO’s were 18 in 2009 with an amount of TK. 23145.32 million. Of the total IPO amount TK.

11529.52 million was offered for the public and TK. 8335.64 million for the sponsors.

Year IPO Issues Issued Cap. Pub. Offer* Sponsors Pub. Subs.

2010 18 26536.59 11529.52 8335.64 108555.55**

2009 18 23145.32 8917.26 15250.57 68265.94

2008 12 8270.00 3043.41 4260.00 37821.71

* Pre IPO is not Considered

** 16 Companies Value

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IPO & Listing 2007-2010

IPO, 14IPO, 12

IPO, 18 IPO, 18

Listing, 14 Listing, 15 Listing, 15

Listing, 25

0

5

10

15

20

25

30

IPO Listing

IPO 14 12 18 18

Listing 14 15 15 25

1 2 3 4

Graph 02: IPO and Listing Scenario

3.9 Business Growth of DSE

Here we will discuss about the business growth of DSE and it includes the growth pattern of

DSE based on the daily avg. trading value and the market capitalization. It also includes the

growth pattern of DSE based on the trading value and quantity along with that a GDP growth

and market capital to GDP ratio. Here we will analyze the growth on the basis of the trading

value-market capitalization, trading value-trading quantity, GDP growth- MKT. capitalization to

GDP ratio. These are given as follows. First of all we will see a data table and then the graphs

will be given-

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BUSINESS GROWTH OF DSE

Year

No. of

securities

listed

No. of

Compa-

nies

No. of

Tradin

g Days

No. of

Trades

Traded

Quantit

y

(mn.)

Trade

Value

Avg.

Daily

Trade

Valu

e

Trad

e

Size

Mkt.

Capital

.

(mn.)

2001 249 211 268 --- 1107 39869.29 149 63530

2002 260 226 287 2646169 1309 34984.92 122 13221 68680

2003 267 240 286 1400137 613 19152.27 67 13679 97440

2004 256 226 266 2159652 684 53492.10 201 24769 224160

2005 286 241 258 2483220 883 64863.64 251 26121 228570

2006 310 267 228 3001540 883 65079.10 285 21682 315446

2007 350 273 237 8167229 2831 322867.07 1362 39532 742196

2008 412 292 237 1505768

6

4605 667964.82 2818 44360 1043799

2009 415 292 244 2827975

4

7973 1475300.8

8

6046 52168 193228

Now we will see the growth pattern of the DSE during the year of 2001 to 2009.

Growth Pattern of DSE

0

200000

400000

600000

800000

1000000

1200000

1 2 3 4 5 6 7 8 9

Year

Daily Avg. Trading Value Market Capitalization

Graph 03: Growth Pattern of DSE

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4.1 CSE MILESTONE

12th February 1995 Bangladesh Government approved CSE

1st April 1995 Incorporated as a limited company

10th October 1995 Floor Trading started

1st January 1996 Became corresponding member of World Federation of

Exchanges (Former FIVB)

2nd June 1998 First bourse to automate the nationwide trading system

1999 Established CSE Investor Protection Fund

16th January 2000 Convened SAFE

26th January 2004 Sponsored Central Depository Bangladesh Ltd. (CDBL)

30th May 2004 Internet Trading Service opened

4th July 2004 Over- the-Counter market opened

4.2 CSE Clearing and Settlement Process

The member shall settle the trade in which the member has dealt in according to “Settlement

Obligation Statement” prepared by the Clearing House of CSE. The Clearing House shall

prepare the statement to work out the settlement position of the member from processing of

information in respect of the securities transaction carried out by Member on each trading day. In

processing the information the Clearing House shall arrange the securities in the following

categories and with the system applicable for settlement of each category of the securities:

4.2.1 A-category companies

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(a) Companies, which are regular in holding the current annual general meetings

and have declared dividend at the rate of ten percent or more in the last English calendar year

and have paid the dividend within sixty days from the date of declaration and have submitted the

requisite compliance report to SEC confirming the paying off the dividend within seven working

days from the date of completion of disbursement shall be described as A-category companies.

Mutual Funds and Debentures shall also be placed in A- category.

(b) In case of a company already placed in A- category, its share shall be placed in

Z- category from the next day of submission, or expiry of the date of submission, of the requisite

compliance report to SEC, if it is found that the company has failed either to pay off the declared

dividend or to submit the said report thereon within the time limits prescribed in the erstwhile

CCI’s Notification NO. SRO.385-Law/91 dated 15th December, 1991 read together with section

2G of the Securities and Exchange Ordinance, 1969 (XVII of 1969), for whatever reason.

4.2.2 B- category companies

(a) Companies, which are regular in holding the annual general meetings but have

declare dividend below ten percent in the last English calendar year and have paid the dividend

within sixty days from the date of declaration and have submitted the requisite compliance report

to SEC confirming the paying off the dividend within seven working days from the date of

completion of disbursement shall be described as B- category companies,

(b) In case of a company already placed in B’-category, its share shall be placed in

Z -category from the next day of submission, or expiry of the date of submission, of the requisite

compliance report to SEC, if it is found that the company has failed either to pay off the declared

dividend or to submit the said report thereon within the time limits prescribed in the erstwhile

CCI’s Notification NO. SRO.385-Law/91 dated 15th December 1991 read together with section

2G of the Securities and Exchange Ordinance, 1969 (XVII of 1969), for whatever reason.

4.2.3 N-category companies

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All newly listed companies except Greenfield companies shall be placed under N-category

companies for which the settlement procedure followed for B- category companies shall be

applicable.

4.2.4 G- Category Companies (I.E. GREENFIELD COMPANIES)

(a) Newly listed shares of those companies, which do not fall under any of the

Categories, mentioned under 1.1, 1.2, 1.3 and 1.5, shall be placed under G - category companies

for which the settlement procedure followed for B- category companies shall be applicable:

(b) In case of failure to declare dividend the shares of such companies shall

continue to remain in this category until the date of the annual general meeting held after

completing two full years from the date of commercial operation, as disclosed in the prospectus.

4.2.5 Z- category companies

(a) Companies, which failed to hold the current annual general meetings or have

failed to declare any dividend or have declared dividend but failed to pay it off within 60 days

from the date of declaration or failed to submit the requisite compliance report to SEC regarding

disbursement of dividend within seven working days from completion of such disbursement date

for whatsoever reason or companies which are not in operation for more than six months or

whose accumulated loss after adjustment of revenue reserve, if any, is negative and exceeded its

paid-up capital shall be described as Z- category companies:

(b) The words ‘or whose accumulated loss after adjustment of revenue reserve, if

any, is negative and exceeded its paid-up capital’ mentioned in the above sub- regulation (a)

shall not be applicable for the companies which have declared dividend out of the current profits

in the last English calendar year and held annual general meeting(s) relating to all outstanding

financial year (s) despite having such accumulated loss exceeding the paid up capital.

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(c) In case of a company already placed in Z-category and declares dividend, its

share shall be placed in ‘A’ or ‘B’ category, as the case may be, from the next day of submission

of the requisite compliance report to SEC confirming paying off the declared dividend within

limits prescribed in the Notification NO. SRO.385-Law/91 dated 15th December, 1991 read

together with section 2G of the Securities and Exchange Ordinance, 1969 (XVII of 1969)

provided there is no defaulted annual general meeting of the company.

(d) The chief executive officer of the Exchange may bring any other company under

this category, if deemed necessary, with the prior written consent from the Commission.

4.3 The Enrollment Process of CSE:

ELIGIBILITY

Membership of CSE facilitates a person prospects to become trading members (stock brokers) of

the Exchange through compliance of the regulatory provisions of CSE and SEC. There are 135

members in CSE all of whom are corporate bodies. The eligibility criteria for the membership

are presented below:

A corporate body with a minimum paid up capital of BDT 2.5 million

Any partner or director thereof as the case may be is/has not

Less than twenty-one years of age;

Bankrupt;

Person of unsound mind;

Person convicted by a competent court of an offence involving moral turpitude.

Found at any time by SEC or any stock exchange or court involved in any misconduct in

respect stock exchange transaction/market

Individual may apply and receive membership on condition that they form a corporate body

within a specified time, usually 6 months from the date of the allotment letters issued to them.

BROKERS/DEALERS

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The trading platform of a stock exchange is accessible only to broker, dealer and their authorized

representative. At present Dealers can perform transaction on their own account only while

brokers act as agent of their client.

Broker and Dealers shall be eligible to trade in CSE when it:

Becomes a members of the CSE;

Becomes members of the CSE Clearing House;

Is not otherwise barred by CSE or SEC

A broker, dealer or their authorized representatives complies with Code of conduct prescribed by

SEC.

COMPLIANCE WITH RESPECT TO BROKERS/DEALERS

The CSE brokers/dealers are required to comply with various requirements for continuing

membership. These include:

Submission of:

Audited Annual Accounts within four months of the end of the financial year;

Monthly Net Capital balance Report;

Shareholding pattern by-yearly;

Any changes in respect of management, structural or legal status of Stock dealers/ stock

brokers should be informed to the Commission within 15 (fifteen) days through stock

exchange;

Compliance Authority report relating to the compliance of rules and regulations of the

Exchange and SEC by his/her Member Company. The report will have to submit to the

Exchange within 15 days after the end of every six-month period ending on 30th June

and 31st December of the year.

Maintenance of the net worth at least half of its paid up capital at all times.

Renewal of their license annually with SEC.

AUTHORISED REPRESENTATIVE

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CSE broker/dealer may appoint Authorized Representative who is registered with CSE and SEC

to act as an agent for doing all the activities related to buy and sell of securities through the stock

exchange. The Authorized Representatives shall---

Not be less than twenty-one years of age;

Have education qualification of HSC or equivalent;

Not be adjudicated as an insolvent

Not be a person of unsound mind;

Not be convicted by a competent court of an offence involving moral turpitude;

Not received punished from the Commission or Stock Exchange.

COMPLIANCE AUTHORITY

Every Broker/dealer shall appoint one of its director or Chief Executive Officer as compliance

Authority for a period not exceeding three years at a time subject to the following:

He/she is not convicted of any criminal offence involving moral turpitude by a competent

court;

He/She has not been found by the Stock exchange or court involved in misconduct in

respect of transaction in any security

He/ She have obtained at least graduation degree.

DISCIPLINARY ACTION AGAINST MEMBER

CSE may exercise any of its following disciplinary powers against a member if the member or its

director, authorized representative or employee commit any act or omission as mentioned in the

Regulation 79 of the General Rules and Regulations of CSE.

Warning

Penalization;

Temporary prohibition from performance;

4.4 Market Performance of CSE

Here we will see that how the performance of CSE market varies depending on various indexes

and analyze on the basis of the turnover value, market capitalization and so on. The following

data table is based on the information on January to March 2011.

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Market Performance of CSE : Jan-Mar, 2011

Description JAN-MAR

2011

OCT-DEC

2010

Quarterly Change

(+/-) (%)

CSE All Share Price Index 17758.67 23448.99 -5690.32 -24.27

CSE 30 Index 14926.10 20988.17 -6062.07 -28.88

CSCX Index 11459.11 15156.37.37 -3697.26 -24.39

Total Turnover Value(TK.

mn)

62039.23 129549.73 -67510.50 -52.11

Total Turnover

Value(USD. mn)

852.07 1811.88 -959.81 -52.97

Total Turnover

Volume(No. mn)

640.04 8475.54 -207.51 -24.84

Market Capitalisation(Tk.

Bn)

2268.25 2983.93 -715.68 -23.39

Market

Capitalisation(USD. Bn)

31.15 41.73 -10.58 -25.35

Issues Traded 228 221

sIssues Gained 10 133

Issues Declined 215 84

Issues Uncharged 3 4

Avg. Daily Turnover

Value

1051.15 2159.16 -1107.65 -51.30

Avg. Daily Turnover

Volume

10.85 14.13 -3.28 -32.30

No. of Days Traded 59 60 -1 -1.68

Cash Dividend Yield 2.25 2.25 0

PE Ratio 20.45 29.15 -8.70 -29.85

Doller Conversaton Rate= TK. 72.81

TK. Mn= Taka in million, TK. Bn= Taka in Billion

USD= United State Dollars

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4.5 CSE Billboard

CSE Billboard on March 31, 2011

Total Number of Listed Securities 233

Total number of Companies 197

Total number of Mutual Funds 33

Total Number of Corporate bonds 3

Total Number of Issued Share, MF Certificates and Corporate

Bonds

17,135,943,776

Total number of shares of all listed companies 14,607,100,096

Total number of certificates of all listed MF 2,521,775,000

Total number of listed corporate Bonds 7,068,680

Total Issued Capital of All Listed Securities 271,781,979,020

Total Issued Capital of All Listed Companies 241,401,299,020

Total issued capital of all MF 23,312,0000,000

Total issued capital of all corporate bonds 7,068,680,000

Total Market Capitalization of All Listed Securities 2,268,246,453,286

Total market capitalization of all companies 2,227,807,966,966

Total market capitalization of all MF 33,620,045,000

Total market capitalization of all corporate Bonds 6,818,441,320

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4.6 Most Active Member of CSE

In every quarter the members of CSE change. The members of CSE has to perform well with

there organizational performance. The most active member of CSE will be chosen from those

criteria. In a survey we found that the most active members in CSE in December, 2010 are-

Rank Members

Code

Member

CompaniesThis Quarter Last Quarter

1 1 91 Lanka BanklaSecurities Ltd.

2 4 96 International Securities Co. Ltd.

3 2 56 Kabir Securities Ltd.

4 7 76 Sohel Securities Ltd.

5 6 22 Salta Capital Ltd.

6 25 Sylhet Metro-City Securities Ltd.

7 8 38 SR Capital Ltd.

8 5 27 BE Rice limited

9 3 3 Meenhar Securities Ltd.

10 9 33 Sylnet Securities Ltd.

11 13 84 Skys Securities Ltd.

12 15 122 Firstlead Securities Ltd.

13 20 19 North-West Securities Ltd.

14 11 5 Island Securities Ltd.

15 12 6 Chittagong Capital Limited

16 10 63 Associated Capital Securities Ltd.

17 14 103 Mona Financial Consultancy ltd.

18 42 Remons Investment and Securities Ltd.

19 17 53 Royal Capital Ltd.

20 16 69 T.K. Shaker & Securities Ltd.

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4.7 Sectoral Index of CSE

Sectoral Index of CSE: December, 2010-March, 2011

SL.

No

Sector 31/03/2011 31/12/2010 Changes Changes

(%)

(+) (-) (+) (-)

1 Life Insurance 13944.22 163563.10 24318.88 14.87

2 General Insurance 1537.63 20579.77 5042.14 24.50

3 Textiles & Clothing 6583.47 7806.7 1223.23 15.67

4 Pharma & Chemicals 18907.58 20835.94 1928.36 9.25

5 Foods & Allied 8240.42 9537.68 1297.26 13.60

6 Cement 4206.91 5084.14 877.23 17.25

7 Eng. & Electrical 8645.18 11330.69 2685.51 23.70

8 Leather & Footwear 4605.11 5374.66 769.55 14.32

9 Services & Property 5460.65 6828.13 1367 20.30

10 Papers & Printing 2427.28 2593.85 166.84 6.42

11 Energy 11326.68 12934.94 1608.26 12.43

12 Mutual Funds 4703.01 10689.48 3286.38 30.74

13 Banks 58741.37 88836.20 30094.83 33.88

14 Ceramic 1034.92 1412.11 377.19 26.71

15 ICT 10524.94 12063.85 1538.91 12.76

16 Leasing and Finance 46542.42 59186.60 12644.18 21.36

17 Telecommunication 1047.07 1486.42 439.35 29.56

18 Miscellaneous 10380.12 10965.30 585.18 5.34

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5.1 Conclusion

DSE has three major indices to reflect market behaviour namely DSE all Share Price Index, DSE

General Index and DSE-20 Index. DSE reintroduced All Share Price Index (DSI) on 28 March,

2005. The DSI stood at 6877.66 points as against 7135.16 points which is 3.61% lower than of

previous month. The Index excludes companies of Z- category and is calculated on the basis of

price movement of individual’s stocks. The Chittagong Stock Exchange was the first stock

exchange in the country to introduce automated trading system on June 1999. The trading system

at CSE known as CHITTRA connected major cities of Bangladesh enabling all members to trade

nation wide simultaneously with ease and efficiency. CHITTRA provides a screen based quote-

driven trading facility. Investors are allowed to quote an expected price in their buy/sell orders.

CHITTRA automatically matches the best prices.

5.2 References

1. http://www.cse.com.bd/index2.php?option=content&page=24#eligibility

2. http://www.bangladesh.gov.bd/index.php?

option=com_content&task=view&id=89&Itemid=157

3. http://www.dsebd.org/process_of_listing.php

4. Monthly Review of DSE (December, 2010)

5. Monthly Review of CSE (Portfolio: January- March, 2011)

6. http://www.bdstock.com/

7. http://www.bdstock.com/ipoperformance.php

8. http://www.secbd.org/lawsupdated.html

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