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Transcript
Presentation on Regulatory Framework of Capital Market Prepared by Mohammad Abul Hasan Director Bangladesh Securities and Exchange Commission Disclaimer Views expressed in the presentation belongs to presenter and do not necessarily reflects the views of the Commission 2 Purpose of this awareness Program I) II) III) To provide an idea of financial market; To provide an idea of regulatory framework of capital market in Bangladesh; To provide an outline of securities related laws, rules & regulations in Bangladesh 3 Some Concept Financial Market: Financial Market refers to a conceptual “mechanism” rather than a physical location. It refers to the mechanism by which borrowers and lenders get together. Financial Market Money Market Capital Market 4 Financial Market Diagram Financial System 5 Some Concept (continue) Money Market The financial markets in which funds are borrowed or loaned for short periods where securities with maturity of one year or less are traded. Money markets securities are treasury bills, bankers acceptances, commercial paper, negotiable certificates of deposits etc. Capital Market The financial markets in which funds are raised by the issuer for long term periods where securities with maturity of more than one year are traded. Capital markets securities are common/preferred share, debenture, bonds etc. 6 Some Concept (continue) Two Segment of Capital Market Capital Market Primary Market Private Placement Secondary Market Public Offering Organized Unorganized Section Section 7 Some Concept (continue) Primary Market Primary markets are the markets in which issuers raise funds by issuing new securities. Secondary Market Secondary Markets are markets in which existing, previously issued securities are traded among investors. 8 Division of Capital Market 9 Organized Section Diagram 10 Regulatory Framework of Capital Market Framework means structure giving shape and support. Some legal structure and institutional structure is essential to run, regulate and control of a capital market which is called capital market regulatory framework. 11 Regulatory Framework of Capital Market Division of Regulatory Framework Legal Framework Institutional Framework 12 Regulatory Framework of Capital Market Act/Ordinance CDBL Rules/Rgulation of BSEC DSE BSEC CSE Order/Directive/ Condition of BSEC Regulation/Bylaw of SRO OTC 13 Legal Framework of Capital Market Law passed by the Parliament/Ordinance issued by the President Rule/Regulation issued by the Commission Order/Direction/Condition imposed by the BSEC Regulation/By Laws issued By the SROs 14 Legal Framework of Capital Market (Contd.) Basic Act & Ordinance The basic acts & ordinance that cover the capital market are: Securities and Exchange Ordinance, 1969 Bangladesh Securities and Exchange Commission Act, 1993 Depository act, 1999 Exchanges Demutualization Act, 2013 Legal Framework of Capital Market (Contd.) The relevant acts that cover the capital market are: Companies Act, 1994 Trust Act, 1882 Insurance Act, 1938 Bank Company Act, 1991 Financial Institutions Act, 1993 Money Laundering Prevention Act, 2012 16 Legal Framework of Capital Market (Contd.) Rules/Regulation Framed By the Commission Insiders Trading Prohibition Rules, 1995 Merchant Banker & Portfolio Manager Rules,1996 Credit Rating Companies Rules,1996 Margin Rules, 1999 Stock Dealer, Stock Broker & AR Rules, 2000 Market Maker Rules, 2000 Issue of Capital Rules, 2001 Over-the- Counter Rules, 2001 Mutual Fund Rules, 2001 Merger & Acquisition Rules, 2002 Security Custodial Services Rules, 2003 Issue of Asset Backed Securities Rules, 2004 Public Issue Rules, 2015 Right Issue Rules, 2006 Securities and Exchange Rules, 1987(Framed by Govt. Before Establishment of SEC) Depository Regulations, 2000 (Issued under Depository Act 1999) Depository (Users) Regulations, 2003 (Issued under Depository Act 1999) Research Analysis Rules, 2013 Private Placement of Debt Securities Rules, 2012 Alternative Investment Rules, 2015 Development of Investment Education and Training Rules, 2016 Qualified Investor Offer by Small Capital Companies Rules, 2016 17 Rules/Regulation Framed by the Commission Depository Regulations, 2000 Securities and Exchange Rules’1987 Public Issue Rules, 2006 Depository (Users) Regulations, 2003 Right Issue Rules, 2006 Insiders Trading Prohibition Rules, 1995 Issue of ABS Rules, 2004 Security Custodial Services Rules, 2003 Research Ananlysis Rules,2013 Merger & Acquisition Rules, 2002 Private placement of Debt securities Rules, 2012 M.Banker & Portfolio Manager Rules,1996 Credit Rating Companies Rules,1996 Margin Rules, 1999 Stock Dealer Stock Broker & AR Rules, 2000 Mutual Fund Rules, 2001 Over-the- Counter Rules, 2001 Issue of Capital Rules, 2001 Market Maker Rules, 2000 Legal Framework of Capital Market (Contd.) Regulations Framed By Exchanges (SRO) Stock Exchange (Listing) Regulations, 2015 Stock Exchange (Settlement of Transactions) Regulations,2013 Stock Exchange (Settlement Guarantee Fund) Regulations,2013 Automated Trading Regulations, 1999 Short Sales Regulations, 2006 Investors Protection Funds Regulation Internet Trading Regulations Stock Exchange (Board & Administration) Regulations, 2013 Stock Exchange (Trading Right Entitlement Certificate) Regulations, 2013 Stock Exchange Bye Laws CDBL Bye Laws 19 Institutional Framework of Capital Market Bangladesh Securities and Exchange Commission Stock Exchanges CDBL Over the Counter (OTC) 20 Institutional Framework of Capital Market (Contd.) Bangladesh Securities and Exchange Commission Established in 1993 under BSEC Act, 1993 Prime Regulator of Securities Market Administers Securities Laws Have Executive & Quasi Judicial Authority 21 Institutional Framework of Capital Market (Contd.) Mission of the Commission Proper issuances of securities Protection of the interest of the investors in Securities Regulation of Securities market Development of Securities market 22 Departments of the commission Commission Commission Secretariat Admin & Finance IAD Surveillance Capital Issue SRI SRMIC Registration MF & SPV R&D MIS CDS Off.. CA Finamcial Literacy LAW Enforcement CFD Internal Audit 23 THANK YOU 24