BSEC orders digital overhaul to protect investors' funds

The Bangladesh Securities and Exchange Commission (BSEC) ordered the Dhaka Stock Exchange (DSE) to ensure unified back-office software so that real-time data of all brokerage houses can be tracked and they cannot embezzle funds of general investors.

Today, BSEC Chairman Masud Khan said around 18,000 investors were impacted by Tk 492 crore in the five brokerage houses, which is “alarming information”.

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“And we do not want to be alarmed anymore,” he said as a chief guest at a ceremony held at the DSE office in the capital, where the stock exchange started handing over cheques to those who were impacted by the five brokerage houses.

The DSE will pay up to Tk 5 lakh each to 17,332 investors affected by the embezzlement of five brokerage houses.

The five brokerage houses are Moshihor Securities, Banco Securities, Crest Securities, Tamha Securities, and Shah Mohammad Sagir & Company Ltd.

Initially, 17,332 investors will receive a total of Tk 72 crore from the Investors Protection Fund (IPF) under the DSE within the next three months. The rest will get the money afterwards.

At the event, the BSEC chairman said what happened in the brokerage houses must not be repeated. “In this digital era, we must do this—there is no alternative.”

For this, several steps must be taken. The BSEC has already told the Dhaka bourse to set up a unified back-office software that will be highly protected.

It will provide real-time data so that every day regulators can monitor how much money is in the brokerage houses' bank accounts and consolidated customers' accounts (CCA).

“Once this is done, less monitoring will be required on our part. The regulator will only need to check occasionally to see if there is any deficit.”

Similarly, stock brokers also need to adopt the OMS (Order Management System), he said.

“The BSEC will try to ensure that such occurrences do not happen again in the future. What is done is done,” Masud said.

Those who invested this money had the trust that they would get further returns from it. Many suffered losses and were living very difficult lives. This lack of trust is surely reflected in the stock market today as well, he said.

The regulatory body will try to restore trust in the market by taking a series of measures.

Nafeez Al Tarik and Hossain Sadat, commissioners of the BSEC, also talked at the event and emphasised systems and practices so that such an experience never comes again.

DSE Chairman Mominul Islam expressed regret on behalf of the stock exchange for the pain of the investors, saying investors may incur losses due to market ups and downs, but this type of financial and psychological loss is not expected at all.

He thanked the broker community for their contribution to the Investors Protection Fund. He promised to return funds whose claims are over Tk 5 lakh soon.

Nuzhat Anwar, DSE managing director, and Nasreen Begum, chairman of the trustee board of the fund, also talked at the event.