It’ll only encourage gamblers, Prof Abu Ahmed
The much-talked-about T+2 trading cycle (trading day plus two days) for share settlement is set to be introduced at the Dhaka Stock Exchange (DSE), the country’s premier bourse, on April 16, aiming to give a further boost to the share market.
“On Sunday morning, we’ll inform the Bangladesh Securities and Exchange Commission (BSEC) about introducing the T+2 trading cycle through a letter,” DSE managing director Swapan Kumar Bala told UNB over telephone on Friday.
He said that the official announcement on the issue will be made later in the day (Sunday afternoon).
Before introducing the system, the DSE will give 30 days’ time to the brokerage houses for their necessary preparations in this regard.
The decision to introduce the T+2 trading cycle was taken at the DSE board meeting on Thursday and the BSEC already issued a gazette notification in this connection.
The DSE will send a letter to all the brokerage houses specifying a certain period for implementing the T+2 trading cycle.
A couple of months back, the DSE decided that the bourse would introduce by February the T+2 trading cycle, scrapping the existing T+3 trading cycle, aiming to shorten the share settlement cycle by one day to revitalise the share market further.
After the introduction of the new system, all shares will become mature in two trading sessions. In the existing transaction system, the DSE settles the transactions within three days of trading.
Although the DSE expects that the new system will boost the market, Prof Abu Ahmed told UNB that it will only encourage the gamblers, nothing else.
He said that it is the gamblers and the brokerage houses of the market will be the beneficiaries of the T+2 trading cycle system.
“The quicker the share and money will get mature the faster the investors will go for buying or selling shares, and that means this system will only encourage the traders,” Abu Ahmed said adding that trading is not the basic of a share market.
He said that the investors who will buy shares considering the companies’ fundamentals of the shares will not be benefitted from this system.
The analyst also said that the new system is not good news in any way for the investors who want to invest for a longer period. “The prices of spurious shares will make a jump, that’s it,” Prof Ahmed said.
When the market has no strength of its own, he said, there is no justification to put extra pressure to boost it. “The system should not be introduced in Bangladesh.”
However, Managing Director and CEO of Aims Bangladesh Limited Yawer Sayeed backed the system saying that it will increase the market efficiency. “This will enhance the market efficiency, it’ll do surely,” he said.
Talking about the revitalizing market with this system, Sayeed said that then market boost-up is related to the country’s economy, companies’ profiles and the announcement of dividends. “If the market gets a boost with this system then that will be an ominous sign,” he said.
Echoing Abu Ahmed, Sayeed also that the gamblers will be encouraged with this system.
The Aims Bangladesh MD also said that the commission of the brokerage houses will increase with the increased trading of shares. “But I don’t think that there is anything to worry about the system (T+2 trading cycle),” he added.
The Chittagong Stock Exchange (CSE) introduced the T+2 share settlement cycle on November 3 last year.
Source: UNB Connect