BSEC approves 14 AMCs in 2yrs

Mostafizur Rahman | Published: 00:00, Dec 07,2019


Capital market regulator Bangladesh Securities and Exchange Commission gave approval to 14 asset management companies in last two years but AMCs failed to play due role in the market during its recent rout.

So far 44 AMCs have got the BSEC approval. Of them, 30 were approved by the current commission headed by chairman M Khairul Hossain.

In last three years, the current commission approved 19 AMCs despite a small number of AMCs could run their business properly and the others are struggling at the market.

The AMCs have failed to play due role at the bearish market that has also irked investors, market experts said.

The core index of Dhaka Stock Exchange, DSEX, shed 1,250 points in last 10 months with Tk 65,000 crore wiped off the market capitalisation.

The market was volatile in last year and lost 13.75 per cent over the year.

An asset management company (AMC) is a firm which pools funds from investors and channels the fund into property, shares, bonds or other assets depending on the financial objectives of its clients.

Along with high-net-worth individual portfolios, AMCs manage hedge funds, mutual funds, index funds, or exchange-traded funds, which they can manage in a single centralised portfolio.

As these types of funds are yet to be popular in the country, the market does not require so many AMCs, market experts said.

Seven AMCs got BSEC approval in 2019 and seven others in 2018.

Market experts said that it was not understandable why so many AMCs got approval from the regulatory body.

They said there was no need of so many asset management companies in the country.

Investors have remained depressed about the performance of the mutual funds since the market crash in 2010-2011 as most of the mutual funds failed to perform up to the investors’ expectation, stockbrokers said.

The AMCs manage the mutual funds.

There are 37 closed-ended mutual funds which are listed on the country’s stock exchanges and 32 of them have been trading far below their face value.

Despite poor performance by the AMCs at the financial market, the BSEC has been giving licences to new AMCs.

BSEC officials said that the commission approved AMCs only when the firms met all necessary criteria.

Market experts, however, said that approval should not be given only on basis of fulfilling document requirements, but the regulator should asses the demand and business opportunity of the entities in the financial market.

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