Professional Documents
Culture Documents
By
Muhammed Mortuza Alam
I=c+s+i
I = Income c = Consumption s = Savings
i = Investment
Two types of financial markets Money markets Capital markets Primary market Secondary market
Financial Market
Money market Commercial banks Credit unions Short term instruments debt Primary market
Capital market
Insurance cos
Secondary market
equity
Public Private placement
Investors Information
Instruments
Equities MF Debenture Bonds
Most popular investing instruments Stocks and shares
Bonus issues
Rights issues Corporate Government
Derivatives
Ever wondered how the capital markets work Who sets the rules What does the stock exchange do What is the role of the stock broker How to become a registered broker
The Regulator
Foremost authority presiding over the capital markets With mission to promote and maintain Fair, efficient , secure and transparent market and to facilitate the orderly development of the stock exchange
Listing requirements
There are specific requirements for allowing a public company to list its securities on the Stock Exchange these are set out in the legislation
Types of Listing
Duel Listing Public Ltd co
Established for the purpose of assisting, regulating and controlling business of buying, selling and dealing in securities
Fair
The exchange assures that no investor will have an undue advantage over other market participants
Efficient market
This means that orders are executed and transactions are settled in the fastest possible way
Transparency
Investor make informed and intelligent decision about the particular stock based on information
Transparency contd
Listed companies must disclose information in timely, complete and accurate manner to the Exchange and the public on a regular basis
Transparency contd
Required information include stock price, corporate conditions and developments dividend, mergers and joint ventures, and management changes etc
Doing business People who buy or sell stock on an exchange do so through a broker
Price
At any point in time, the price of previously issued stock is determined by the flow of supply and demand
Liquidity
Ability to sell an asset quickly at a fairly known price Low transactions costs
The securities market of Bangladesh is regulated by the Securities and Exchange Commission (SEC) under the Ministry of Finance. Bangladesh has two Stock Exchanges, Dhaka Stock Exchange (DSE), established in 1954 and Chittagong Stock Exchange (CSE), established in 1995. The trading system of both the exchanges is automated. CSE implemented the automated trading
CSE has trading facilities with global network capabilities. ?At present trading is going on from Dhaka, Chittagong, Sylhet and Coxs Bazar simultaneously which has brought the mobility of shares and transparency in the capital market. In January 2005, CSE has plan to start trading from Barisal and in February 2005 from Rajshahi. In near future CSE has plan to expand its network to khulna and other cities also.
INTERNET TRADING SERVICES (ITS)
CSE has started Internet Trading in May 2004 to enable the remote investors to have trading facilities from their offices.residences. The Internet Trading Service (ITS)is going on and the users of this module are increasing.
Sylhet
Broker in Sylhet
Rajshahi
Dhaka
Brokers in Dhaka
Khulna
CSE Trade Engine
Brokers in Ctg
Chittagong
ASSOCIATED RULES CSE provides the above trading services under the following rules and regulations:
TRADING SCHEDULE
Pre-Opening Session Opening Session Cont. Trading Session Closing Session CP-Trading Session Post Closing Session Odd Lot Trading Session : : : : : : : 09:409:55 09:5510:00 10:00 14:15 14:15 14:20 14:20 14:30 14:30 15:15 10:00 14:05
However, The CEO in Committee may extend, curtail or change the trading hours, including the session timings if the situation warrants so and such changes will be intimated to the members.
ORDER TYPES Limit Order Good Till Cancelled (GTC) Good For Day (GFD) Good Till Date (GTD) Market Order Full Fill of Kill (FOK) Partial Fill Rest Kill (PFRK) Partial Fill Rest Convert (PFRC) Minimum Fill
Drip Feed Order (Multiple Limit Orders) Stop Loss Order Match at Closing Price Order Odd Lot Order Bulk Lot Order Big Lot Order Foreign Investors Order Spot Order Auction Order
Odd Lot, Bulk Lot, Big Lot, Spot, Auction and Foreign Investors Orders will not be considered for BBO formation and calculation of Closing, Average, High, Low, Last Traded prices, quantities and indexes for the securities.
ORDER VALIDATION The member shall give the following information for order entry:
Order Type Security Code Buy/Sell Indicator Quantity Price Client Code GTC,GTD,GFD (except Odd Lot, Spot, Close Price and Auction orders) Market Order protection, FOK, PFRK, PFRC, Minimum Fill, if market order Total Quantity & Replenish Quantity, if Drip Feed Order
TICK PRICE All prices entered into the system shall be a multiple of tick price for that security. The following tick prices are available in CSE trading system: Face Value of Tk 1.00 : Face Value of Tk 10.00 : Face Value of Tk 100.00 : Face Value of Tk 1000.00 0.01 0.10 0.25 :
0.50
ORDER ACCEPTANCE
An order that passes the validation checks will be accepted by the Exchange system with a unique order ID and particular time stamp and will be forwarded to the execution system. Modified orders will be time stamped again.
AMEND ORDER The price, quantity, retention & client ID of an order can be changed prior to execution, or for any unexecuted portion of an order.
CANCELLATION OF ORDERS
Orders can be cancelled at any point of time prior to execution. All orders shall be automatically deleted from the system once their time condition has expired.
ORDER MATCHING The system matches orders with existing opposite of orders which have the best price. Waiting orders are matching in the following sequence:
SUSPENSION OF TRADING
The CEO in Committee of CSE has the authority to suspend or activate trading of specific securities,
For A, B, G and N and Z Category Companies (a) Up to Tk 200 :20% but not exceeding Tk 35 (b) Tk 201 to Tk 500 :17.5% but not exceeding Tk75 (c) Tk 501 to Tk 1000:15% but not exceeding Tk 125
Listed companies send their price sensitive information and disclosures to exchange
Every member is allowed to trade (buy and/or sell) in CSE up to Tk 1 crore without depositing margin. Member shall deposit the members margin with CSE Clearing House on the additional trade exposure exceeding above 1 crore at the following rates:
: : : : 20% 30% 50% 100%
(a) Above Tk 1 crore but not exceeding Tk 2 crore (b) Above Tk 2 crore but not exceeding Tk 3 crore (c) Above Tk 3 crore but not exceeding Tk 5 crore (d) Above Tk 5 crore
The following are considered as members margin: a) Irrevocable & without recourse to the Drawer Bank/ Insurance Guarantee b) Govt. Securities c) FDR issued by the scheduled bank d) Savings Certificates issued by the Govt. of Bangladesh e) Life Insurance Policy at surrender value f) DD/PO issued by the scheduled bank g) Securities listed with CSE (valued at 70% of the lowest market price prevailed in the exchange in the previous week) h) Cash
Instruments mentioned in above from (a) to (g) shall be endorsed in favor of CSE 90% of the value of the instruments mentioned in above (a) to (g) shall be considered as the value of the members margin.
1. To get share certificate on own name 2. To sale/transfer otherwise 3. To get notice of general meetings 4. To attend the meeting and to vote 5. To get annual reports 6. To get dividend, interest 7. To elect directors 8. To be elected as a director 9. To get Rights Shares when issued 10.To get shares split 11.To complain to the Company, Stock Exchange,SEC if the above rights are infringed.
The Defaulters' Committee of CSE shall hear the complaint of the customers and may declare a Member as a defaulter if the Committee finds that the Member is unable to fulfill its engagements or fails to meet an obligation to its customer. A member who has been declared a defaulter by the Defaulters' committee shall at once cease to be a member of the Exchange.