Treasury bond trading on DSE to be activated soon

Committee involving BB, BSEC, DSE formed

Mostafizur Rahman | Published: 00:00, Nov 16,2019


Trading of treasury bonds on the Dhaka Stock Exchange platform would be activated soon with the aim of making vibrant the secondary bond market which has remained inactive for years.

Bangladesh Bank officials said that the finance ministry had instructed the officials concerned to launch the secondary trading of the bonds soon.

Bangladesh Securities and Exchange Commission executive director Saifur Rahman told New Age that a meeting among the BB, the BSEC and the DSE was held at the BSEC office on November 13 to expedite secondary bond trading.

A seven-member committee comprising officials of the three entities and headed by BB debt management department general manager Khurshid Alam was formed on the day, he said.

The committee will work to find business plans for the bond market, he said.

Another BSEC official said that the committee would look into how the transactions of the securities and funds would be settled.

It will also set the minimum transaction amount of treasury bonds — whether it would be current minimum ceiling Tk 1 lakh or more.

To reduce transaction cost more, the regulators would seek tax exemption on bond proceeds from the government, the official said.

DSE officials said that the central bank had taken the issue seriously and it wanted to launch trading of the treasury bonds as soon as possible.

The committee may propose reducing bond transaction fees at minimal level to draw investors’ attention, they said.

Eligibility of bonds trading will also be set as not all kinds of investors would be allowed to trade bonds.

The BB, the BSEC and the DSE have been trying to make the secondary bond market vibrant, they said.

Officials of the bourse also said most of the other trading-related complexities had already been addressed.

In a letter to the BB governor last month, the DSE had requested the central bank to accelerate the commencement of trading of treasury bonds on the DSE platform.

‘It is the time to take necessary and effective measures from the direct partners associated with this venture for establishment of a vibrant bond market,’ it said.

The central bank’s Market Infrastructure Module will be linked with the DSE so that investors can buy and sell government securities through the stock market, DSE officials said.

The MI module is being modified to ensure IT security, DSE officials said.

In late 2011, the central bank introduced the Market Infrastructure Module to execute the online trading of treasury bills and bonds.

Banks, non-bank financial institutions, government and non-government organisations and corporate entities are allowed to invest in the secondary bond market through banks.

A total of 221 treasury bonds are listed on the stock exchange. Treasury bonds of five, 10 and 15 years of tenure began to be listed on the DSE from 2005.

There is no data regarding the 221 bonds available at the Central Depository Bangladesh Ltd as the Bangladesh Bank shifted the data from the CDBL to its own office.

The market capitalisation of treasury bonds listed on the country’s stock exchange is around Tk 54,938 crore, which accounts for around 17 per cent of the bourse’s total market capitalisation.

Want stories like this in your inbox?

Sign up to exclusive daily email