The Dhaka Stock Exchange can brace itself for some radical technological upgrades in the near future that would take it to global standards after Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) became its strategic partner.
The Chinese consortium, which will ink the deal to purchase 25 percent stake in the DSE today, has offered to share an array of technical products and services covering all aspects of the stock exchange business.
“With the product and services, DSE can become a leading stock exchange in the region,” said the proposal from the consortium.
The consortium has offered to assist in mapping the information disclosure process for issuers at the DSE and share its expertise in designing an electronic information disclosure system.
The platform would provide corporate information of the issuing companies, simple analytical tools, interactive question and answer facility and online complaint portal with a view to enhancing transparency and corporate governance.
“It will allow investors to make more informed investment decisions as they may ask any question and get answer from the issuing company,” said KAM Majedur Rahman, managing director of DSE.
The Chinese consortium would also help the DSE to upgrade its trading and surveillance systems.
Over the years, SZSE has developed leading edge expertise in research and development and operation and maintenance of the market surveillance system.
“Through this partnership, SZSE can assist in developing a fully functional, responsive, efficient and practical market surveillance system for the DSE, which is adapted to meet local market regulatory requirements,” said the proposal.
The consortium will also help the DSE to design one-stop business solutions to create a unified, secure and efficient IT platform architecture to achieve comprehensive electronic business process services.
It has also offered to develop the bond market. In particular, SZSE has offered its bond auction tender system which is useful in managing auction of bond products with fairness and transparency.
The Chinese consortium also proposed financial data exchange platform, which is a stable and low-cost capital market communication infrastructure to connect the DSE, the Bangladesh Securities and Exchange Commission, the Central Depository of Bangladesh Ltd and other core market institutions.
The technological offers are worth $37.11 million, which the consortium would bear.
Rahman said the consortium will not only upgrade technology but will also try to bring in foreign investors to the DSE by drawing into China's pool of 11,000 qualified institutional investors.
“These investors are seeking well-performing companies. They would not put their money in overvalued shares or badly performing companies,” said the DSE MD.
At present, the DSE has only 25-30 companies that are attractive to foreign investors, said Abu Ahmed, former chairman of the Dhaka University's economics department and a stockmarket expert.
“The BSEC and the DSE will have to work hard to get solid companies to the market.”
The Chinese consortium has also offered to assist the DSE in developing index-based products, bonds and asset-backed securities to diversify products in the DSE.
It has also offered to assist in designing, promoting and showcasing Bangladeshi indices in China as well as developing the DSE's derivatives market.
“Confidence among foreign investors will soar when the strategic partner will start to work in the DSE,” said Mostaque Ahmed Sadeque, president of the DSE Brokers Association.