Reforms planned for Capital Market Stability Fund
The Capital Market Stabilisation Fund (CMSF), established under the Capital Market Stabilisation Fund Rules, 2021 (CMSF Rule 2021) of the Bangladesh Securities and Exchange Commission (BSEC), is currently undergoing significant structural and managerial changes.
The BSEC has instructed the CMSF to diversify its bank deposits, with funds to be deposited in Sonali Bank, Janata Bank, and Agrani Bank within six months. This move aims to increase the Fund's financial stability and security. Fixed deposits (FDRs) must be encashed upon maturity with interest and redeposited in these banks.
The CMSF has received Tk697.10 crore in cash from issuer companies and settled investors' claims of Tk9.40 crore. The Fund has also received 14.37 crore shares as stock dividends but not disbursed to investors, of which it has settled claims for 3.15 crore shares.
The proposed 2025 legislation recognises the CMSF as a statutory fund, providing legal clarity on its structure, management, financial operations, oversight, and relationship with the BSEC. This recognition will ensure the Fund's long-term sustainability and effectiveness.
To optimise responsibilities, improve efficiency, and reduce unnecessary staff, the CMSF's human resources will be reorganised. A new seven-member board will be formed to oversee the CMSF, chaired by the BSEC chairman. At least 50% of the cash balance must be used for providing loans to market intermediaries for refinancing as margin loans.
The CMSF will function as a centralised dividend distribution hub for listed companies. This will simplify the dividend distribution process and increase transparency. A centralised TDS system will also simplify tax filing for investors and encourage greater participation in the capital market.
The CMSF will use the interest earned from its funds for investment education and raising investor awareness. Currently, the CMSF has invested a total of Tk325 crore in the capital market for stability. A maximum of 40% of CMSF's cash balance can be used for direct buying and selling of listed securities.
A high-level meeting was held to discuss restructuring CMSF operations for effectiveness, transparency, and sustainability. The Financial Institutions Division has prepared directives for the finance ministry regarding the CMSF reforms. However, the search results do not provide information about which institution is intended to lead the CMSF in the future.
The BSEC has rejected a request from the finance ministry to transfer approximately Tk1,500 crore held in the CMSF to the state treasury. The CMSF will operate under sub-lease arrangements at BSEC or BANM offices until December 2026.
These reforms are aimed at ensuring the CMSF's long-term sustainability, financial stability, and efficiency. They will also increase transparency and investor confidence in the capital market. The CMSF will submit a progress report to the BSEC within three months regarding the bank deposit diversification.
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