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

Purpose of this awareness Program 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

Financial Market: Some Concept 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 Diagram Financial System

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.

Some Concept (continue) Two Segment of Capital Market Capital Market Primary Market Private Placement Public Offering Secondary Market Section Organized Unorganized

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.

Division of Capital Market

Organized Section Diagram

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.

Regulatory Framework of Capital Market

Regulatory Framework of Capital Market BSEC CDBL CSE OTC DSE Act/Ordinance Rules/Rgulation of BSEC Condition of BSEC Order/Directive/ Regulation/Bylaw of SRO

Legal Framework of Capital Market

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

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

Rules/Regulation Framed by the Commission

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

Institutional Framework of Capital Market

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

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

Departments of the 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

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