Over the past nine months, the trajectory of the nation’s stock market has predominantly been negativity, starting from August of the previous year. This downward trend has been attributed to the trust deficit faced by the newly installed commission, led by Khondoker Rashed Maqsood. Critics argue that Maqsood’s leadership has failed to adequately address the problems that have historically hampered the market performance. As a consequence of this, a consistent degradation in market indices has become apparent, an occurrence pinned to Maqsood by investors and stakeholders who have suffered significant financial loss.
Dissent among commission officials has risen, as they argue that stock brokers desire too much autonomy in running their businesses. This uneasiness emerges in a scenario where market indices tell a tale of decline. At the onset of Maqsood’s term in the interim government on 18 August, the DSEX, a principal price index, marked above 6,000 points. As of 7 May, however, it had shrunk to 4,802 – the lowest since November 23, 2020.
In addition to the descending market trends, daily transaction figures plummeted drastically following Maqsood’s appointment. Average transaction values reduced from over Tk800 crore to a mere Tk300 crore. These transaction losses severely impacted market intermediaries, with about 90% of them sinking into considerable losses. Market capitalisation saw a similar fate, sagging by approximately Tk78,000 crore till 8 May. This affected the valuations of companies and mutual funds listed on the stock market, which fell to Tk3.31 lakh crore.
An extended phase of negative market performance elicited strong reactions from concerned investors. Many of them were driven to protest, making demands for the stepping down of Maqsood and direct involvement of the chief adviser. Following this, a meeting to discuss resolutions was called by Chief Adviser Muhammad Yunus, looking for effective steps to mend the ongoing decay. However, key stakeholders were suspiciously left out of this crucial gathering, adding to the confusion.
The prolonged strife between the regulatory body and stakeholders continues to bleed the stock market. Insiders have suggested that Maqsood, from the start of his term, has kept a noticeable distance from the market’s stakeholders. This estrangement marked a substantial reason behind the dwindling investor confidence in the market.
The recently established commission took the course of utilising exceptional powers afforded by the Demutualisation Act. This route allowed them to appoint board members without consulting or giving due weight to the recommendations of the affected entities. This practice fostered a breakdown in communication between stakeholders and the commission. Such a course of action eventually led to further discontent within the stakeholder community.
The situation was complicated further when a task force was constituted without seeking consultations from the stakeholders. Adding insult to injury, the new commission also slapped hefty fines, totalling nearly Tk1,000 crore on numerous companies and individuals over allegations of past corruption and manipulation of the market.
Despite the hefty penalties levied, not a single one was successful in collection. Stakeholders responded critically to this course of action, arguing that such ‘unrealistic’ fines sent a false signal to the market, potentially spooking investors and deepening the crisis.
In stark contrast to the fine levying initiative, officials previously implicated in corruption charges were dealt no disciplinary action by the new commission. This seeming tolerance of corruption raised serious questions about the commission’s intent and undermined its authority. These corrupt officials then rebelled against Maqsood, further degrading the standing of the regulator within the market.
In a dramatic turn of events, 21 commission officials were suspended for breaking service rules during a protest. The protest had one clear demand – the immediate resignation of Maqsood. This event marked a significant low in the commission’s relations with its own officials and highlighted the fractious situation afflicting the stock market’s governing body.