Bangladesh Securities and Exchange Commission has extended deadline of the bourses Settlement Guarantee Fund formation by six months to reduce settlement risks in trading.
The regulator made the decision to extend the deadline to June 30, 2018 following an appeal of the two stock exchanges- Dhaka Stock Exchange and Chittagong Stock Exchange, said the officials of BSEC.
With the SGF in place, the objectives of DSE (Settlement Guarantee Fund) Regulations, 2013 and CSE (Settlement Guarantee Fund) Regulations, 2013 will be fulfilled, they said.
The objective of the fund was to reduce the settlement risk in case of trades in the exchange and to ensure settlement of the traders in the manner prescribed in the regulations, DSE officials said.
After the formation of the fund, all trade on the exchange would be guaranteed, providing greater investor protection, they said.
As per the guidelines, the SGF fund will be formed with an initial contribution of the exchanges and its TREC holders. For DSE, the primary contribution was set to be Tk 100 crore and for the CSE at Tk 50 crore.
The TREC holders of both bourses will contribute Tk 5 lakh each as subscription in the fund out of which Tk 2.5 lakh will be collected on call made by the management and remaining Tk 2.5 lakh will be collected between second and third years of formation of the fund, the guidelines said.
The market regulator also directed the exchanges that both bourses must transfer 5 per cent of their annual net profit to their SGF as a regular contribution on annual basis. Any income generated from the funds will be attributable to the fund, it said.
According to the regulations, if any TREC holder fails to deposit the contributions within time and further fails to pay default interest by 0.10 per cent per day, the exchange will have the power to suspend the TREC holder’s right to trade on the exchange.
The fund shall be administered by management committee of the exchanges headed by its chief regulatory officer in such a manner as may be required for achieving the objective of the fund for which it is created, said the guidelines.
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