Independent University,

Bangladesh

Semester- Autumn 2017

Instructor: G. M. Wali Ullah

Course-Investment Management
(FIN-460)

Section-01

Date of submission- 14/02/2017

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 Letter of Transmittal

February 14, 2017

G. M. Wali Ullah
Instructor,
School of Business,
Independent University, Bangladesh.

Subject: Submission of a market survey broker house current situation in Bangladesh.

Dear Sir,
We are pleased to submit our report, according to the instructions given by you.
We have prepared this report with full determination and sincerity to make it a success. In writing we earnestly tried
to keep it simple and reader-friendly for you and others who may feel interested to go through it.

Moreover, we will be pleased to clarify and answer any questions regarding possible discrepancies or
inconsistencies that may have presented itself in the paper.

Thanking you.
Yours sincerely,

Name ID

SYED WAFI HAIDER 1310897

SK SAROWARBAKSH NILOY 1310769

ABU SADAT MD SAYEM 1311069

MD EUSUFUL ISLAM 1421285

SAZZAD HOSSAIN 1421420

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 Acknowledgements

At first, we would like to thank the Almighty for giving us this opportunity to
study in one of the most renowned university, Independent University, Bangladesh
(IUB) and study in their very reputed School of Business. To make this report
successful, we want to show our gratitude to those who have lent their hands of
cooperative participation. We want to convey our special thanks to our course
instructor, Sir G. M. Wali Ullah for giving us such an opportunity, which will
enhance our knowledge. Without his guidance and help, the preparation of this
report would have been difficult.

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 Contents

#Topic# #Page no#

Introduction, Methodology, History of the 05
company, Objective
Mission, Trading, Vision 06
Transaction policy 07
BO account 07
Deal with customer 08
Type of market 08
International Investment 09
Transaction policy 10
Margin Trading policy (Bangladesh) 10
Type of investment information 11
Sources of investment information 11
Market average and index 12
Broker service 15
Type of brokerage trading 15
Basic type of order 16
Take order policy 16
Investment advisor 18
Clearing services 18
Recommendation 18
Conclusion 19
Attach Picture 20
References 21

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 Introduction

A brokerage house is a company licensed to buy and sell stocks or securities. Acting as an intermediary between
buyers and sellers, this company typically employs brokers who carry out the wishes of the firm's clients as they
maintain to the trading of stocks. Broker services are usually provided on a commission basis.

A.L. Securities limited is a corporate member of Dhaka stock exchange limited and the company provides on the
business of brokers, dealers in stocks, shares, securities, commodities, commercial papers, bonds, obligations,
debenture stocks, treasury bills either as a joint debenture in collaboration with foreign company of exclusively with
local participants.

Methodology

There are both primary and secondary information were used in this report.

The primary information were provided by A.L. Securities Ltd and allowed to show in public.
The secondary information was collected from annual report A L. Securities Report, Internet, Prospectus and
Fundamentals of Investing; 12th Edition; Pearson.

History of the company

A.L .Securities limited is a private company limited by shares integrated on 2nd December, 2004 in Bangladesh
under the companies Act, 1994. A. L Securities is licensed by SEC as a stock broker in the Dhaka Stock Exchange
as well as being licensed by the Central Depository Bangladesh Limited as a fully pledged Depository. A.L.
Securities always try to maintain highest level of quality in service. Because of this rapid growth of Investors
Company, it has focused on sustainable development of service with reliability and flexibility as a result within few
years they have been able to increase their branches in few division of Bangladesh

Objectives

Provide a complete, high-quality trading experience in various markets and a well experienced Relationship
Management team.
Undertake any business relating to the Stock Exchange, such as a clearing house, securities depository center.
Provide a fully automated trading system with most modern facilities. To ensure: quick, easy, accurate
transactions and easily accessible to all.
Provide an investment opportunity for small and large investors through earning commission.

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 Mission

The mission of A.L. Securities is to be a customer oriented and value creating company. A.L. Securities take a
commitment to provide light speed services to their client with pioneering quality. Increasing customers wealth is
maximizing shareholders value, this is the concept they carry for their business. All their decision is based on
superior evidence and logic. Through market research and fundamental following, they maximize wealth.

Serving their clients, they will conduct themselves with these principles.

Highest level of integrity in service

Education of client and proper communication with them on changing market situation.
Execution with supreme speed and efficiency
Data driven approach for forecasting market scenario, research & rational thinking at the heart of every
decision
Innovation for breaking norms and setting finest standards

Trading

The Dhaka Stock Exchange and Chittagong Exchange are open for trading Sunday through Thursday between
11:00am 3:00pm, with the exception of holidays declared by the Exchange in advance.

Vision

A.L. Securities vision is to be one of the respected leading brokerage houses in the country and to follow ethical
business practices. A.L. Securities is an organization where orthodoxy and conservativeness is cherished when it
comes to clients wealth. But in financial product and user experience innovation, it is unorthodox and future
thinking. Their business has been constructed upon the core principle of clients wealth maximization. It is a
leading full service broker in Dhaka Stock Exchange.

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 Transaction policy

Transaction policy in A.L. Securities Ltd. is online basis (software) link with DSE (Dhaka stock
exchange) and CSE (Chittagong stock exchange).

Transaction Policy

Central
depository Create customer BO Account Bank Account
Bangladesh
ltd

Buy and sell share/stock by phone, mail, physically

Opening a new BO account

For A.L. Securities to open a new BO account a person has to go over few requirements. To open a BO A/C please
follow the steps below:

1. First, open an account at a bank (public or private both)

2. Collect a BO Account Opening Form from A.L. Securities House and fill it up.
3. Documents needed to open a BO Account.

For Individual Applicant

Two copies of passport size photograph.

National ID card Or Photocopy of Passport/ Bank Statement/ Driving License/ Nationality Certificate.
Two copies of passport size Photograph of nominees.

Joint Applicant
Two copies of passport size photographs.
National ID Card. Or, Photocopy of Passport/ Bank Statement/ Nationality Certificate.

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Sole Trader/Proprietor
Trade License.
Partnership Agreement/ Resolution of Partners to operate the BO account.

Corporate Account

Photographs of the Directors.

Photocopy National ID Card. Or, Photocopy of the Passport/Driving License/Nationality Certificate.
Board Resolution.
Memorandum and Articles of Association certified by RJSC.
Signature and Photograph of the authorized person (if any).
Now customer needs to pay the brokerage house an account opening fee (different brokerage house
charges different amount from Tk. 600 Tk. 1000) and submit documents to them.
Account will be opened within 3 days to 1 month.

A.L. Securities Ltd. is trying to introduce technological facility to their clients. They are developing software which
will notify the clients about the current position of their portfolio. How many securities are matured and money is
idol etc.

Dealing with customer

A.L. Securities Ltd. Provide current statement data and also they provide e-mail facility for their customers. They
give extra facility to their loyal clients. They give them private treading facility with their own trader. If the clients
face any account related problem even financial problem A.L. Securities Ltd take cares of them.

Type of Market

Criteria of the share Category

1. A Category Companies: Companies which are regular in holding the Annual General Meeting (AGM)
and have declared dividend at the rate of 10 percent or more in a calendar year. (Mutual fund, debentures
and bond are being traded in this category).
2. B Category Companies: Companies which are regular in holding the AGM but have failed to declare
dividend at least at the rate of 10 percent in a calendar year.
3. G Category Companies: Greenfield companies.
4. N Category Companies: All newly listed companies except Greenfield companies will be placed in this
category and their settlement system would be like B-Category companies.

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 5. Z Category Companies: Companies which have failed to hold the AGM or failed to declare any
dividend or which are not in operation continuously for more than six months or whose accumulated loss
after adjustment of revenue reserve, if any is negative and exceeded its paid up capital.

There are 4 type of market in Bangladesh they are-

1. Money market
2. Capital market
3. Primary market
4. Secondary market

A.L. Securities Ltd provide money market and capital market for their loyal clients because those market are short
term and long term investment and for the new client the company provide primary and secondary market because
here new IPO issue, even primary and secondary market is open for all the clients. The capital market has become
more stable for couple of years. People have become more aware on their investment. They are now more concern
about the performance. On the other hand rules and regulation of DSE and CSE is helping to keep the market stable.
A.L. Securities Ltd is closely monitoring the activities of the companies as well as the investor to ensure a smooth
and clear capital market.

International Investment

A.L. Securities Ltd does not provide international investment in abroad but people in difference countries can create
an account in A.L. Securities Ltd and investment in Bangladeshi company with A.L. Securities Ltd consultancy.
A.L. Securities Ltd has lot of foreign investor and foreigner has to buy and sell stock easily from this brokerage
house. Actual this transaction is occur through the internet and mail and A.L. Securities Ltd software which directly
included by DSE and CSE.

For international investor there are some bank operate and they are

1. Standard Chartered Bank

2. The Hongkong and Shanghai Banking Corporation Limited
3. Commercial Bank of Ceylon Limited
4. Woori Bank
5. Citi Bank Bangladesh
6. Habib Bank Limited
7. National Bank of Pakistan
8. State Bank of India

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There is some rules and regulation for the foreign investor and they are-

1. A Foreign Currency (FC) account for inward and outward remittances.

2. A Non-Resident Investors Taka Account (NITA) with an authorized commercial bank or any bank branch
for converting foreign currency into Taka.
3. Stock Broking account should be opened with any stock broker of the respective Stock Exchange.
4. If you need to trade shares listed with the Stock Exchanges, investors must have a Beneficiary Owners (BO)
Account with Central Depository Bangladesh Limited.

Transaction policy

Anyone above the age of 18 can open a trading account. A.L. Securities Ltd provide 3 type of transaction policy
they are

1. Long purchase
2. Margin trading
3. Short selling
During 2010 market crash and software updated A.L. Securities Ltd does not provide long purchase and short selling
from 2011. They provide margin trading and they were providing 1:1 before 2010. For margin trading they provide
50%-70% loan, depending on client and investment amount. For merging trading they take some interest rate and
the interest rate are 15%-17% depending on the loan and amount of investment for their client.

Bangladesh Margin trading policy

Officially margin requirements in bourses in Bangladesh were initiated on April 28, 1999, to limit the amount of
credit available for the purpose of buying stocks. The goal of this paper is to measure the impact of changing margin
requirements on stock returns volatility in Dhaka Stock Exchange (DSE) and Chittagong stock exchange (CSE).
The effect of margin requirement on stock price volatility has been extensively studied with mixed and ambiguous
results. Using daily return of DGEN Index, we found no evidence that SECs margin requirements have statistically
significant impact on return volatility in DSE. Of course, findings from this study could be source of comfort for the
regulators in Bangladesh.

A.L. Securities Ltd provides brokerage margin to facilitate leverage on their client investment. A.L. Securities Ltd
provides margin trading facility as per Margin Rules 1999.
A customer has to go through proper credit evaluation to get margin loan. Loan limit is guided by the prevailing
rules and regulations set by the regulatory authority. A margin loan management committee determines the margin

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limits of investors. The committee periodically announces the marginable stocks. Investors have to utilize their
margin facilities in the selected stocks only.
Fees & Charges

Brokerage commission is 0.50% on transaction value

Interest on Margin Loan is 15%-17% which is accrued daily and charged quarterly

Type of Investment Information

There are two type of investment information

Descriptive information - included factual data on past behavior of economy, market, Industry Company.
Analytical Information- available current data in conjunction with projections and recommendations about
potential investments.

A.L. Securities Ltd provides both descriptive and analytical information for their client. In descriptive information
they collect all the past data from DSE /CSE or company past annual report and share all the past data with their
client. On the other side they also analyses the current data in conjunction with projections and recommendations
about potential investments. For current data information they find the price earnings ratio portfolio of the company
and finding the net asset value of all the organization. For collecting information they had their own software which
running through by their head office.

Sources of investment information

Investment information resources on securities and investment both in print and online, intended for the general
public. The first section lists general resources including handbooks, guides, dictionaries and periodicals. Different
types of securities such as stocks, bonds, mutual funds, etc. are treated in separate sections that list books and
periodicals useful for understanding and researching each type. The Internet Resources section is intended to
provide practical sources for investors and consists of freely available online resources on various types of
investment instruments. A.L. Securities Ltd collects all the information from particular company website, company
annual report, newspaper, TV sources and DSE/CSE.

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 Market average and index

The Dhaka Stock Exchange Limited introduced DSE Broad Index (DSEX), DSE 30 Index (DS30) and DSEX
Shariah Index (DSES) which include mutual funds, debentures and bonds. DSE Bangladesh Index Methodology
designed and developed by S&P Dow Jones Indices with effect from January 28, 2013. DSEX is the Broad Index
which reflects around 97% of the total equity market capitalization of the Exchange. DS30 constructed with 30
leading companies which can be said as investable Index and it reflects around 51% of the total equity market
capitalization of the Exchange. DSEX Shariah index is the broad market benchmark index which measuring the
performance of the Bangladesh equity market.

A.L. Securities Ltd follows the Dhaka stock Exchange and Chittagong stock exchange website indexes includes
DSE Broad Index (DSEX), DSES Shariah Index (DSES) and DSE 30 Index (DS30) for market analysis and
provides the informations about the market average, market cycle and trend, general market conditions, companys
portfolio performances, forecast the future market behavior. They determine the current market index, Day range,
previous closing price, weekly range, one year return, yield to return and average price behavior of a certain period
of time.

Here, we show the current market index of DSEX, DSES and DS30 for February 05 to February 09, 2017.

DSE Broad Index (DSEX) Current week Last week

Opening day of this week 5,365.14 5,618

Closing day of this week 5,512.46 5,365.14

Change within a week (%) 2.75 (4.51)

Change within a week (point) 147.33 (253.51)

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DSEX Shariah Index (DSES) Current week Last week

Opening day of this week 1,254.79 1,292.49

Closing day of this week 1,284.93 1,254.79

Change within a week (%) 2.40 (2.92)

Change within a week (point) 30.14 (37.70)

DSE 30 Index (DS30) Current week Last week

Opening day of this week 1,956.90 2,038.48

Closing day of this week 2,002.36 1,956.90

Change within a week (%) 2.32 (4.00)

Change within a week (point) 45.47 (81.58)

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 Comparison of DSE Index

Bangladesh Stock Market (DSE General) 1990-2017

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 Broker services

A.L. Securities Ltd is a pioneering full service broker in Bangladesh, offering services to the individuals,
institutional and foreign clients. It is an organization where passion means wealth clients wealth maximization.
Because they understand bigger wealth means bigger trade volume.

A.L. Securities Ltd features include:

Mobile-friendly technology for access to all the new features, enhanced capabilities and information whenever,
however - computer, laptop, tablet or Smartphone.
Real-time news updates and an event calendar that lets you save important events to client personal calendar.
Product and underwriting information with descriptions, rate sheets, underwriting guidelines and proposal
documents.

Type of brokerage trading

There are two type of brokerage trading account.

1. Cash account
2. Margin account
Cash account

Charges Types of Account Rate (BDT)

Brokerage Commission Cash 0.50 Paisa

CDBL Charge Cash Actual Basis

Account Opening Fee(Yearly) Cash 700

Margin account

Charges Types of Account Rate (BDT)

Brokerage Commission Margin 0.50 Paisa

CDBL Charge Margin Actual Basis

Account Opening Fee(Yearly) Margin 700
Documentation Charge Margin 1000
Interest On Loan Margin 15%-17%

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 Basic type of order

There are 3 type of order policy.

1. Odd lot order

2. Round lot order
3. Market order
A.L. Securities Ltd follows only the market order policy because of since 2010 Bangladesh share market crash
whey wont follow the Odd lot order and Round lot order. Market orders are a request or sell a stock at the current
market price. Market orders are pretty much the standard stock purchase order.

There is some difference type of order that A.L. Securities Ltd followed.

Limit order

This is an order that executes at a specific that set and can be open for a specific time period while a limit order will
prevent anyone from buying or selling customer stock at a price that customer dont want. If the price is way off
base, the order will never execute.

Stop order

This is market order that is triggered once customer stock reaches a specific target price, the stop price. Stop order
may also called stop-loss orders because they help investors put constraints on their losses.

Stop limit order

This is identical to the stop order expect for the fact that a limit order is triggered once customer stock reaches a
specific target price.

Take order policy

Online trading is a service provided by A.L. Securities Ltd. Here, customers can place order anytime, schedule it for
anytime, and A.L. Securities Ltd Representative will place the order in the market for the client. The key facilities
provided in the A.L. Securities Ltd Brokerage Online trading service are,

1. Online order placing, anytime, even outside the market hours.

2. Scheduled order placing. Investors can schedule their order to be executed on certain dates.
3. One online trading account can place order for multiple clients. A grouped client service is available.
4. Clients can cancel or modify order before trade execution.

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 5. Client can gets access to the A.L. Securities Brokerage financial portal and easily monitor the market and
generate trade ideas.

Security

To ensure security, login from the client is required.

Process

Log into the A.L. Securities Brokerage

Place order anytime
Client can also schedule order
the A.L. Securities Brokerage Representative Receives Notification
the A.L. Securities Brokerage Representative Executes the Order
Client can cancel or modify the order from the Online Trading panel.
Confirm Order Execution from Online Trading Panel

It should be noted that, the order execution is not instantaneous and the order is not directly placed in the market.
After receiving the order notification, A.L. Securities authorized trader would place the order in the market and try
to get the required price for the client.

##Online trading policy##

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 Investment advisors

Financial advisor is the single most important thing for capital market. Investors are always looking for an advisor
where they can go to understand which share will be good for their portfolio, how to maintain a healthy portfolio,
and where to invest. A.L. Securities Ltd providing the expert advises on investment to their clients as a part of their
business. On the other hand A.L. Securities Ltd providing work on a fee-based system of dispensing investment
advice catered towards individual client needs. For example an investment advisor may work with a client to create
an entire wealth management framework include assisting the clients through tax, estate, and mortgage planning.

Clearing Service

The clearing service provided by A.L. Securities Ltd is automated based on the DSE provided system. For stocks in
A, B, G, and N category, the settlement takes Transaction Date + 2 days. For Z category however, it is T+9
days. In the case when stock is traded in Spot Market, the clearing takes only T+0 days.

The major stakeholders of the clearing system is,

A.L. Securities Brokerage

CDBL
Clearing Bank
DSE Finance Division

A.L. Securities ensures the due time clearing of all the transaction with its own clearing tracker. Collaboration with
and pressurization on other stakeholder on due time clearance is held vital in A.L. Securities clearance culture

Recommendations

Since the capital market of Bangladesh expanding very rapidly so the brokerage houses of the country got a great
role to play. As the economy of a country very much dependent on the capital market of that country. And a
strong capital market can be ensured by ensuring a strong infrastructure for the brokerage houses of the country.
SEC and government should relax their rules and regulations that create obstacle in the smooth going of
brokerage houses. To expand the capital market of the country fast government can take some initiatives like
The government should immediately off-load its own shares lying in different organizations and
companies.
Recently countrys capital market has witnessed many records but to continue the trends of current pace and
progress of securities market off-loading of fundamentally sound companies shares should be done immediately.

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 Conclusion

Stock market is the reflector of and countries economy system, which is also under development. So it is an obvious
that it will have an enormous number of problems. But it is also true there is a lot more opportunities for stock
market in Bangladesh. If we can overcome these problems it will be a great strength for this nation. This strength
will make another sector bigger which is the brokers of stock and securities. So if the broker houses can solve their
problem and maintain their operation according to rules and regulation then it can become one of the largest
business sectors in Bangladesh. To expand the capital market of Bangladesh there are some initiatives should be
taken. The government should immediately off-load its own shares lying in different organizations and
companies. Apart from increasing the depth and width of market it will also help generate employment
opportunities for the educated unemployed youths.

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During survey in A.L. Securities Ltd discussion with Mohammad Asadujjaman (Manager, Uttara
Branch)

Reference card

Mohammad Asadujjaman

Manager

Uttara Branch

A.L. Securities Ltd

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 References

Topic Website Article

Brokerage house definition http://www.wisegeek.com/what-is-a- Written By: N. Madison

brokerage-house.htm Edited By: Niki Foster
Last Modified Date: 20 January
2017
Copyright Protected:
2003-2017 Conjecture
Corporation

Investor Account information Annual report A.L. Securities Ltd

International Bank http://lankabd.com/tell-me- Lanka Bangla Financial Portal

how/helpMeLearn

Other Information http://www.thefinancialexpress- Bangladesh online financial stock

bd.com/ Newspaper

Market average and index, http://www.dsebd.org/ DSE

http://www.cse.com.bd/ CSE

Type of order, type of market Fundamentals of Investing; 12th

Edition; Pearson
Margin trading (Bangladesh) Fundamentals of Investing; 12th
Edition; Pearson
Take order policy Annual Report A.L. Securities Ltd

Type of brokerage trading Annual Report A.L. Securities Ltd

and prospectus.
Basic and stock information https://www.stockbangladesh.com/ Stock Bangladesh Ltd.

Annual Report of A.L. Securities Ltd and survey their brokerage house (Uttara Office)

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