The bond market is not accelerating due to weak demand

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Trading in government securities on stock exchanges has not gained momentum due to a lack of awareness and complications regarding transactions, people involved in the capital market have said.

Transactions therefore did not increase despite a rise in market capitalization, they added.

Addressing identified issues is necessary to increase trading of government securities or bonds on stock exchanges, stakeholders said during a panel discussion titled “The Basics of Government Securities and Trading on the exchange platform”, organized by the Dhaka Stock Exchange on Thursday.

On October 10, the Bangladesh Securities and Exchange Commission (BSEC) allowed 250 government securities with terms ranging from two to 20 years to be traded on the Dhaka Stock Exchange (DSE) on a trial basis.

On the show, BSEC Commissioner Shaikh Shamsuddin Ahmed said: “There were only eight transactions in government securities in 20 days. During an investigation, we discovered that there “There was a gap between demand and supply. The problem was that enough demand hadn’t been created through a proper campaign.”

Program participants also identified differences in trading regulations of Bangladesh Bank and stock exchange, limited knowledge of brokerage houses on bond pricing method, investor ignorance, circuit breaker, problems in the accounting system of banks due to T+2 (exchange date plus two days) settlement of transactions and brokerage commission as major issues in bond trading in the capital market.

In addition, there are issues regarding taxation, market valuation for banks as per Bangladesh Bank guidelines, business partner identification number, beneficial owner identification number and transfer of securities .

Saifur Rahman Mazumdar, acting managing director of DSE, said it is mainly banks and financial institutions that hold government securities. They buy and sell the bonds on the Bangladesh Bank platform. General investors will be interested in trading government securities if trading on the DSE platform increases.

DSE Chairman, Md Eunusur Rahman, who chaired the programme, said, “Bangladesh has made progress in social development, but lags behind in the financial sector. If this sector cannot be developed, it will be difficult to develop the country in a sustainable way.

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