For the past nine months, beginning in August of the previous year, the nation’s stock market has maintained a declining course. According to some, this is largely due to the inability of the newly appointed committee, headed by Khondoker Rashed Maqsood, to instill faith in investors and stakeholders by tackling the issues that have previously threatened the market’s stability.
Many stakeholders and individual investors attribute the continuous drop in market indices to Maqsood’s leadership, leading to substantial financial losses. Meanwhile, officials of the commission suggest that stock brokers express dissatisfaction with stringent regulations, preferring more autonomy in running their operations.
Upon Maqsood taking the helm of the commission on 18 August under the transitional government, the DSEX – the primary price index – which was above 6,000 points, fell below 5,000 points reaching 4,802 by 7 May, the lowest since 23 November 2020.
There was a drastic plunge in day-to-day transaction values. Just after Maqsood assumed his role, the average amount of over Tk800 crore was severely reduced to a mere Tk300 crore, causing approximately 90% of market intermediaries substantial losses.
By 8 May, the cumulative worth of listed firms and mutual funds had declined by approximately Tk78,000 crore to Tk3.31 lakh crore. This extended period of underperformance in the market sparked much resentment among investors, many of whom took to protesting, demanding Maqsood’s dismissal and intervention from the chief adviser.
Consequently, a meeting was called by Chief Adviser Muhammad Yunus to resolve the ongoing crisis and strategise a way forward, yet stakeholders were not included in the discussion. The consistent lack of communication and cooperation between the regulating authority and stakeholders continues to fuel the market’s decline.
Insight from those within the market revealed that since the beginning of his term, Maqsood created a distance between himself and the stakeholders, a significant contributor to the ongoing lack of investor confidence. The new commission utilized extraordinary powers endowed by the Demutualisation Act to elect board members, completely ignoring the entity’s recommendations.
This act is considered the origin of the deterioration in communication between the commission and the market’s stakeholders. The formation of a task force that failed to engage with stakeholders further intensified their unease.
The newly established commission imposed penalties, nearly Tk1,000 crore in total, on a number of corporations and individuals for prior incidents of corruption and market manipulation. However, not a single penalty has been successfully collected.
Stakeholders expressed their criticism of the seemingly ‘unrealistic’ fines, stating that they send the wrong signal to the market. No disciplinary actions were implemented by the new commission, even though among them were officials who had previously faced accusations of corruption.
These very same officials eventually decided to stand up against Maqsood, which only served to dent the commission’s reputation within the market. As a result, there was a call for the chairman to quit, during which 21 officers from the commission were suspended for flouting service rules.