Business Activities of Capital Market

Business Activities of Capital Market

An Internship Report for partial fulfillment, degree of BBA
Executive Summary
This report is prepared on the basis of my twelve weeks practical experience at. This internship program helped me a lot

of learn about the practical situation of the capital market. Brokerage house activities mainly are fully customer oriented organization. The capital market has played the most important and vital rule in the economy of the country. Prospect and efficiency of a service oriented organization depends on quality of its services. So brokerage house try to enhance satisfaction of their customers through innovative service.

Stock exchanges are absolutely important for the proper functioning of capitalistic economy. In such a manner the financial institutions especially the organized stock exchanges contribute to the industrialization to the country. Capital markets serve to transfer capital from the surplus units to the deficit units. Primary market issued shares first time, then the shares come to the secondary market. Both primary and secondary market are dependable to one another. In primary market shares are issued by IPO to the public. In secondary market the shares, which are issued in the primary market, are traded through the brokers. It plays an important role by mobilizing the funds to those who can make a proper and productive use of the sale. They also help the surplus units to be capable of earning returns by serving the economy to utilize their idle funds in accelerating the economic emancipation through employment generation. Stock market include primary market, floating initial public offering and secondary market were existing security of listed companies are being traded. Sylhet Metro City Securities Limited (MSL) is a leading equity brokerage house in Sylhet with a diverse clientele of institutions, high net worth individuals, foreign funds and retail investors. The company commenced stock broking activities in 2009 and developed a strong team of highly skilled and experienced professionals. The company’s success is underpinned by its strong network of key clients and its unparalleled standard of service

Quality, offering clients the highest level of convenience and reliability in transacting business. Now trading has become automated, lead by DSE through central depository Sylhet Metro City Securities Limited (MSL) and it is playing an important role to generate internet based trading system. It gains reliable value of secure transactions by satisfying customers. Research shows that overall performance of MSL is satisfactory except its pricing policy and promotional activities. Research also indicates different types of investors and their knowledge level about the market. Necessary findings and recommendations are articulated to enhance the strength of Sylhet Metro City Securities.

The first chapter discussed about the origin, background, objectives, methodology, scope and limitations of the study. The fourth chapter discussed about the Chittagong Stock Exchange and Sylhet Metro City Securities Limited. It includes the background, vision, mission, core values, objectives, management, rules and regulations. The second chapter analyzed the capital market, meaning of capital market, Security and Exchange Commission, Dhaka Stock Exchange, Chittagong Stock Exchange. The six chapter overviewed of Sylhet Metro City Securities Limited. It includes the legal status, vision, mission, operation, branches, accounts policies and trading. The seven chapter included the findings and SWOT analysis. The third chapter viewed the potential of Bangladesh capital market . It includes the reasons behind the under development. The fifth chapter highlighted the Dhaka Stock Exchange. It includes the history, policy and function of DSE.

The eight chapter consists of recommendation and conclusion. It includes the problems of capital market, recommendation to improve the activities of capital market and finally conclusion.

Introduction
Origin of the Study:
This Internship study has prepared as a requirement for the completion of the BBA Program of Since the BBA program is an integrated, practical and theoretical method of learning, The primary goal of internship is to provide an on-the-job exposure to the student and an opportunity for translation of their theoretical conceptions in real life situation. the students of this program are required to have practical exposure in any kind of business organization as last term of this course. At the completion of BBA program, I was placed in Sylhet Metro City Securities Limited, Zindabazar Branch. The duration of my internship was three months, starting from February 01, 2012 to May 15, 2012. This report covers the topic- Business Activities of Capital Market ‘A Case Study on Sylhet Metro City Securities Limited’

Background of the Study:
The devolopment of economy of any country depends mostly on the establishment of sound, effective and efficient financial system of a country. Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia region. It has to full fledge automated stock exchanges namely- Dhaka stock exchange (DSE), and Chittagong stock exchange (CSE) and an over-the counter exchange operated by CSE. It also consist of a dedicated regulator, the secuirities and exchange commision (SEC), since, it compliments rules and regulations, monitors their complication to operate and devolop the capital market. A well devoloped financial system plays an importent role in accelarating economic growth by mobilizing saving and facilitating investment in an efficient manner. Financial market is composed of different markets- Money market, Capital market, etc. All the market play in interactive rule for the devolopment of economy by formation of capital through mobilizing funds, providing services, linking investors to the industrial entrepreneurs etc, Besides, this requires sound regulatory framework, sound and investment sensitive administrative infrastructure, fiscal supports for making their rule effective for economic devolopment. It consist of central depository Bangladesh limited (CDBL), the only central depository in Bangladesh that provides facilities for the settlement of transaction of demetarialized securities in CSE & DSE. Everyday a large no. of new investor are invloving to this market and making their investment. A significant number of them don’t know much about the capital market, how to trade in the secondary market. Nevertheless, the brokerage house also has a greate rule in this movement. In this study I have tried to know and inform the capital market of Bangladesh as well as the function of the brokerage house. For my study I select Secuirities Limited (MSL) where I am working.

Objective of the Study:
The objective of Business Activities Bangladesh. To Ripot BBA, accomplish this practical objective following specific objective have been covered Capital Market of Bangladesh.

General Objective:
The principle objective of the project is to know Business Activities of Capital Market of Bangladesh. To accomplish this practical objective following specific objective have been covered:

Specific Objective:
•To identify the problems of capital market and brokerage houses.

•To make suggestions to improve the activities of capital market and brokerage houses

•To become familiar with the functions and services provided by the Sylhet Merto City Securities Ltd

•To acquired knowledge about capital market in Bangladesh.

•To know the activeties of brokerage houses.

•Understanding the documentation and its use in brokerage houses.

•To identify various indicator of Bangladesh stock market growth.

Scope of the Study:
The scope of this study is the branch of Securities Limited in Sylhet and their operations throughout the country. The report also touches the Securities and Exchange Commission, Bangladesh bank, Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE) and Marchant bank etc.

Methodology of the Study:
I have mainly prepared my report based on secondary sources. However I have also collected data from some primary sources like visitors, clients, officials, observation and discussion while I was working at Sylhet Metro City Securities Limited (MSL).

Secondary Sources:
With regard the secondary information however I have collected information from the various issues of Annual Report of Securities and Exchange Commission of Bangladesh, Monthly Review of Dhaka Stock Exchange (DSE), Monthly Review of Chittagong Stock Exchange (CSE), website of DSE and CSE, websites of Sylhet Metro City Securities Limited (MSL), newspaper report and journals etc.

Limitation of the Study:
Some limitations of the reports are:

• Hesitance to share all types of information on the part of the Bank.

• Lack of availability of sufficient data.

• Time span – 3 months was not very sufficient for a report of this magnitude.

• Less time to work on as I came back from office at 6 pm.

Capital Market in Retrospeer
Meaning of Capital Market:
The capital market is market for securities, where companies and government can raise long-term funds. The capital market is one of the most important sources for companies to raise money. This allows business to the publicly traded or raise additional capital for expansion by selling shares of ownership of the company in a public market. It is a market in which money is lent for periods longer than a year. A Market in which individual and institution trade financial securities, Institutions in the public and private sectors often sell securities on the capital market in order to raise fund. Thus, this type of market is composed of both primary and secondary market. Capital market is the group of inter-related markets, in which capital is finance from is lend or borrowed for medium and long-term and in case equities for unspecific periods. A capital market is simply any market where a government or a company can raise capital to fun their operation and long term investment. Selling bond and stock are two ways to generate capital thus bond market and stock market as capital market.

Primary Market:
The primary market deals with newly issued securities and is responsible for generating long term capital.

Secondary Market:
The secondary market handles the trading of previously issued securities and must remain highly liquid in nature because most of the securities are sold by investors.

Securities and Exchange Commission (SEC):
The Securities and Exchange Commission (SEC) was established on 8th June, 1993 under The chairman and members of the Commission are appointed by the government and have overall responsibility to administer securities legislation. the Securities and Exchange omission Act, 1993. The commission is a statutory body and attached to the Ministry of Finance.

Responsibilities of SEC:
According to section 8 of the Securities and Exchange Commission Act, 1993 the responsibilities of SEC are:

· Prohibiting fraudulent and unfair trade practices relating to securities markets.

· Promoting investors education and training of intermediaries of securities market.

· Prohibiting insider trading insecurities.

· Regulating business in stock exchange and any other securities markets.

· Registering and regulating the work of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustee of trust deeds, register to an issue, merchant bankers, underwriters, portfolio managers, investment advisors and any other intermediaries who may be associated with securities market in any manner.

· Registering, controlling and regulating the work of collective investment schemes including mutual funds.

· Promoting, regulating and controlling self regulatory organizations.

· Regulating substantial shares acquisition and company take over.

· Undertaking inspection, conducting inquiries and auditing the stock exchanges, intermediaries and self regulatory organizations in the securities market.

· Levying fees or other charge for carrying out the activities described above.

· Conducting research for the above activities and declaring data and information.

Securities and Exchange Commission Regulatory Framework:
· Securities and Exchange Commission (Mutual Fund) Regulation 1997

· Securities and Exchange commission (Control of Insider Trading) Regulation 1995

· Securities and Exchange Rules 1987

· Capital Issues (Continuance of Control) Act 1947

· Securities and Exchange Ordinance 1969

· Securities and Exchange Commission Act 1993

· Securities and Exchange Commission (Stock Broker, Stock Dealer and Authorized Representative) Regulation 1994

· Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Regulation 1996

· Credit Rating Rules 1996

· Public Issue Rules 1998

· Right Issue Rules 1998

Dhaka Stock Exchange (DSE):
Dhaka Stock Exchange generally known as DSE is the main stock exchange of Bangladesh. It is located in Motijheel at the heart of the Dhaka city. It was the incorporated in 1954. Dhaka Stock Exchange is the first stock exchange of the country.

History of the Dhaka Stock Exchange (DSE):
First incorporated as Stock Exchange Association Ltd in 28 April 1954 and started formal in 1956. It was renamed as East Pakistan Stock Exchange Ltd in 23 June 1962. was initiated in 24 January 2004. As of November 16, 2009, the benchmark index of the Dhaka Stock Exchange (DSE) crossed 4000 points for the first time, setting another new high at 4148 points. In 2010, the index crossed 8500 points and finally crashed in the first quarter of 2011. Millions of investors lost their money and came out onto the street blaming the speculators and regulators for the bubble that finally burst. Again renamed as Stock Exchange Ltd in 13 May 1964. After the in 1971 the trading was discontinued for five years. In 1976 trading restarted in Bangladesh, on 16 September 1986 DSE was started. The formula for calculating DSE all share price index was changed according to on 1st November 1993. The was initiated in 10 August 1998 and started on 1st January 2001. the speculators and regulators for the bubble that finally burst

Policies of Dhaka Stock Exchange (DSE):
DSE can introduce automatic monitoring systems that may control price manipulation, malpractice and inside trading. The management of DSE should be vested with professionals and should not in any way be linked with the ownership of stock exchange and other firms. It should train the investors about fundamentals to deal in share transactions and punish the member brokers for breaking of contact. It can make sure all the listed companies publish their annual reports with actual and proper information that can ensure the interest of the investors. To force the listed companies to declare and pay regular dividends through conducting Annual General Meeting (AGM) and make arrangement to set up merchant banks and floatation of more mutual funds particularly in the private sectors. More bank, insurance companies and other financial institutions should be encouraged to deal in share business directly. The management of DSE should be vested with professionals and should not in any way be linked with the ownership of stock exchange and other firms. It should train the investors about fundamentals to deal in share transactions and punish the member brokers for breaking of contact.

Function of Dhaka Stock Exchange (DSE):
The major functions are:
· Publication of Monthly Review.

· Monitoring the activities of listed companies. (As per Listing Regulations).

· Investors grievance Cell (Disposal of complaint bye laws 1997).

· Investors Protection Fund (As per investor protection fund Regulations 1999)

· Listing of Companies.(As per Listing Regulations).

· Providing the screen based automated trading of listed Securities.

· Settlement of trading.(As per Settlement of Transaction Regulations)

· Gifting of share / granting approval to the transaction/transfer of share outside the trading system of the exchange (As per Listing Regulations 42)

· Market Administration & Control.

· Market Surveillance.

· Announcement of Price sensitive or other information about listed companies through online.

Chittagong Stock Exchange (CSE):
It was established in 1995 as the second stock exchange in the country, and located in the port city of Chittagong in southeastern Bangladesh. The CSE trading system: CHITTRA has four modules including Broker’s Workstation (BWS), The exchange comprised of twelve board members and run by an independent secretariat from the first day of its beginning. Chittagong Stock Exchange (CSE) was formerly opened by then Honorable Prime Minister of Bangladesh on November 4, 1995. CHITTRA has four modules including Broker’s Workstation (BWS), Market Operations Systems (MOPS), Surveillance and VECTOR. Founder member of the proposed Chittagong Stock Exchange (CSE) approached the Bangladesh Government in January 1995 and obtained the permission of the Securities and Exchange Commission (SEC) on February 12, 1995 for establishing the countries second Stock Exchange. The exchange comprised of twelve board members and run by an independent secretariat from the first day of its beginning. Chittagong Stock Exchange (CSE) was formerly opened by then Honorable Prime Minister of Bangladesh on November 4, 1995.

Chapter- 3
Potential of Bangladesh Capital Market
Reasons Behind the Underdevolopment:
Access to high quality the creditable corporate information remains a major problem in the market. An estimate suggests that the ratio of institutional-to-retail investors is still low in Bangladesh, even relative to other emerging markets. Institutional investors bring long-term commitment and a greater focus on fundamentals and, hence, stability in the market. The presence of institutional investors is also expected to ensure better valuation levels due to their specialized analytical skills. While we do have public sector as well as private sector institutional investors in the economy, proprietary investment from these institutions is not significant -- other than the Investment Corporation of Bangladesh that was created in 1976 and currently manages several mutual funds. Corporate governance of international standard is still lacking. Multinational corporations and institutions operating in Bangladesh often adhere to a very high international standard compliance regime. Parent companies of most of there corporations and institutions have their scripts listed in developed markets. Unless the local market adheres to, and effectively enforces, a standard corporate governance system, there will not be a level-playing ground for international business houses in relation to local operators. An important aspect for capital market is reflection of fair value of scripts. White a handful of institutional investor may enjoy certain benefits seems they have investment unit manned with qualified officers nothing exist for retail investor and in the absence of independent research house retail investors primarily focus on advice given by their brokers which often consists of market rumors. The market has to reach such a stage of development that companies will take it as a serious alternative to bank financing. The government has reduced the interest rates on savings instruments, however this particular market is still limited to the commercial balks, and individual investors do not have access to i frumenty are considered risk-free, and since they are not these instruments. These savings ns present in the capital market, the overall risk of investment for an investor remains very high. A portfolio investor does not have the option of reducing his average portfolio risk by adding these risk-free opportunities. This is not adequately present in the current scenario, and due to this reason the market is not receiving the attention of alt important segment of investors, both foreign and local. Investors are perhaps depending more on speculative analysis, resulting in volatility in the market, as opposed to fundamental analysis, which could attract more stable long-term investors who are sure about their investment tenure and expectations.

Bangladesh Capital Markets:
Institutionalization of the Market:
It is expect to see more institutional investors bringing long term commitment and liquidity to the market Longer investment horizons reduce market volatility Institutional investment strategies are fundamental focused rather than speculative, Multinational corporations and institutions operating in Bangladesh often adhere to a very high international standard compliance regime. Parent companies of most of there corporations and institutions have their scripts listed in developed markets. Unless the local market adheres to, and effectively enforces, a standard corporate governance system, there will not be a level-playing ground for international business houses in relation to local operators. An important aspect for capital market is reflection of fair value of scripts.

Listing Fundamentally Sound Well-reputed Companies:
With the improvement of corporate governance, it could be easy to attract sound corporate to come to capital markets. Quality scrip provide liquidity and motivation for educated investors to participate in capital markets Listing of large, reputable corporate attracts foreign investments, increase liquidity Introduction of new scrip in different sectors provides investors with broader options Recent addition of telecom sector likely to generate interest among other large cap companies to list Inclusion of well reputed, large cap companies Will reduce ability of select “investor syndicates” to manipulate prices, A portfolio investor does not have the option of reducing his average portfolio risk by adding these risk-free opportunities. This is not adequately present in the current scenario, and due to this reason the market is not receiving the attention of alt important segment of investors, both foreign and local.

Introduction of BASEL 2 Guidelines:
Introduction of BASEL 2 guidelines by Bangladesh Bank likely to encourage banks to raise capital through debt instruments in 2010 Issuance of debt and equity by barks through capital markets likely to generate increasing liquidity.

Flotation of Mutual Funds:
Strong pipeline for listing of mutual funds (US$300mm in mutual funds expected to enter the market by mid 2010) Provide retail investors with safer, indirect market access, preventing wealth & capital losses Reduces dependency on retail investors, allowing institutions to bring commitment and stability to the market Bring much needed market stability that only institutional investors can provide.

Facilitation of Private Equity Investments:
Recent introduction of certain foreign private equity investors in Bangladesh Provide table flow of capital given mid to long term investment horizon of PE investments High risk hurdles and selective investments direct PE funding to quality local corporate Bangladesh Provide table flow of capital given mid to long.

Recent Regulations and Opportunity Space Strengthening of Surveillance:
Following the stock market crash of 1996, measures have been taken to prevent future incidents of the sort Constant market surveillance by the SEC Increasing standards of corporate governance Demit Trading Focus on investor education establishment of Capital Markets Institute.

Introduction of Book Building / Price Discovery:
Introduction of book building is a big step towards developing Bangladesh capital markets
Book building reduces risk of undervaluation for issuers Ensures fair pricing by factoring in demand, likely to encourage listing of large, well-reputed companies SEC qualifying conditions for book-building set certain criteria for companies to be eligible.

Chapter- 4
Dhaka Stock Exchange
Dhaka Stock Exchange (DSE):
Dhaka Stock Exchange generally known as DSE is the main stock exchange of Bangladesh. It is located in at the heart of the. It was the incorporated in 1954. Dhaka Stock Exchange is the first stock exchange of the country.

History of the Dhaka Stock Exchange (DSE):
First incorporated as Stock Exchange Association Ltd in 28 April 1954 and started formal in 1956. The formula for calculating DSE all share price index was changed according to on 1st November 1993. was initiated in 24 January 2004. As of November 16, 2009, the benchmark index of the Dhaka Stock Exchange (DSE) crossed 4000 points for the first time, setting another new high at 4148 points. It was renamed as East Pakistan Stock Exchange Ltd in 23 June 1962. Again renamed as Stock Exchange Ltd in 13 May 1964. After the in 1971 the trading was discontinued for five years. In 1976 trading restarted in Bangladesh, the index crossed 8500 points and finally crashed in the first quarter of 2011. Millions of investors lost their money and came out onto the street blaming the speculators and regulators for the bubble that finally burst.

Policies of Dhaka Stock Exchange (DSE):
DSE can introduce automatic monitoring systems that may control price manipulation, malpractice and inside trading. More bank, insurance companies and other financial institutions should be encouraged to deal in share business directly. The management of DSE should be vested with professionals and should not in any way be linked with the ownership of stock exchange and other firms. It can make sure all the listed companies publish their annual reports with actual and proper information that can ensure the interest of the investors. To force the listed companies to declare and pay regular dividends through conducting Annual General Meeting and make arrangement to set up merchant banks and floatation of more mutual funds particularly in the private sectors. It should train the investors about fundamentals to deal in share transactions and punish the member brokers for breaking of contact.

Function of Dhaka Stock Exchange (DSE):
The major functions are:
· Publication of Monthly Review.

· Monitoring the activities of listed companies. (As per Listing Regulations).

· Investors grievance Cell (Disposal of complaint bye laws 1997).

· Listing of Companies.(As per Listing Regulations).

· Gifting of share / granting approval to the transaction/transfer of share outside.

· Market Administration & Control.

· Market Surveillance.

· Investors Protection Fund (As per investor protection fund Regulations 1999)

Chapter- 5
Chittagong Stock Exchange
And
Sylhet Metro City Securities Limited

Background: .
Chittagong Stock Exchange is a located in the port city of in southeastern. Surveillance and VECTOR. Founder members of the proposed Chittagong Stock Exchange approached the Bangladesh Government in January 1995 and obtained the permission of the Securities and Exchange Commission on February 12, is located in the commercial volume is less than many brokerage houses in Bangladesh.
The CSE trading system: CHITTRA has four modules including Broker’s Workstation (BWS), Market Operations Systems (MOPS), 1995 for establishing the country's second stock exchange. The Exchange comprised of twelve Board members, presided by and run by an independent secretariat from the very first day of its inception. CSE was formally opened by then Hon'ble Prime Minister of Bangladesh on November 4, 1995.

Vision:
Aspire a global standard transaction place of securities and financial product.

Mission:
Practice a set of core values to build competency in compliance, diversification and technology so that an accessible platform, market confidence and wealth maximization scope can be ensured.

Core Values:
Value for people
Transparency
Excellence
Harmony
Commitment
Integrity

Objectives:
· Increase business turnover

· Modernize trading system

· Ensure effective relationship management

· Achieve high level of confidence & professionalism

· Engage in product and market diversification

· Contribute to capital market policy development

· Ensure exchange related quality services.

Management:
The CEO is responsible for implementing the decisions of the Board, the day to day running of the exchange and formulating strategic plans for agreement with the board.

Following are the functions of the CEO and the various Departments of CSE:
Systems: The Systems Department carries out the following functions:
· Deal with user queries

· Manage communication network

· Manage information technology developments and suppliers

· Manage trading and operate Clearing & Settlement System

· Maintain master file

· Print daily reports and produce statistics

· Support internal users and setup and train new system users

Clearing, Settlement & Dp: This Department is Responsible for:
· Ensuring exchange clearing and settlement activities through clearing house

· Handling settlement failure

· Handling auction settlement

· Maintenance of members margin

· Provide depository related services

Market Operations: This Department Carries Out the Following Functions:
· Monitor public information

· Monitor, receive and disseminate regular company information

· On-line surveillance

· Receive and disseminate price sensitive company information

· Receive and manage investor complaints

· Receive and manage other complaints

Listing, Marketing & Education: This Department is Responsible for the Following:
· Arrange training

· Ad hoc legal problems

· Maintain master organogram

· Maintain personnel files and staff list

· Monitor and record leave requests and leave taken

· Monitor rules and regulations

· Monitor, receive and disseminate regular company information

· Respond to requests for information, members queries and complaints

Finance & Administration: This Department is Responsible for the Following:
· Conducting statutory and management meetings of the company and provide secretarial service relating thereto

· Prepare Annual and periodic Financial Statements

· Prepare Budgets and monitor the income and expenditure with the budget

· Controlling banking operations of the company

· Compliance of taxation rules and policies including withholdings, payments and filing of tax returns and documents

· Issuing certificates to brokers and other authorities

· Maintaining IPF(Investors Protection Fund) Accounts

· Oversee the development activities of the Exchange including acquisition and development of properties, schedule payments and coordinate associated activities

· Providing support to develop and implement corporate strategies, mission and vision

Research, Corporate Development & Information:
This Department Carries Out the Following Functions:
· Maintain library contents

· Press cuttings and press relations

· Produce portfolio and other CSE publications

· Public relations

· Investor's information cell

Management:
1. Mr. Syed Sajid Husain
Chief Executive Officer

2. Mr. Ahmad Dawood
Deputy General Manager, Company Secretary & Head of Finance

3. Mr. Md. Ghulam Faruque
Deputy General Manager, Dhaka Office

4. Mr. Mohammed Mazbah Uddin
Deputy General Manager, Head of Information Technology Services

5. Mrs. Sonia Hossain
Deputy General Manager, Market Regulations

6. Mr. Md. Mortuza Alam
Assistant General Manager, Market Regulations

7. Mr. Mohammad Monirul Haque
Assistant General Manager, Clearing & DP Services

8. Mr. Maksud-ur-Rahman
Assistant General Manager, Market Development and International Relations

9. Mr. Kazi Tanzeeb Shahid
Assistant General Manager & Internal Auditor

1. Mr. AKM Shahroze Alam
Assistant General Manager, Market Development

2. Mr. Arif Ahmad
Assistant General Manager and Head of Human Resource

3. Mr. Kanan Barua
Assistant General Manager, Information Technology Services

4. Mr. Hasnain Bari
Assistant General Manager, Information Technology Services

5. Mr. Md. Nahidul Islam Khan
Assistant General Manager, Membership

6. Mr. Kamal Uddin Jalal
Assistant General Manager, Research and Development

7. Mr. Md. Karimullah
Manager, Administration

8. Mr. Minhaz U. A Chowdhury
Manager, Administration

9. Mr. Md. Khaled Hamidi

Manager, Research & Development

10. Mr. Adnan Abdur Raquib
Manager, Membership

Every year CSE makes a total turnover amount and growth rate of their market.A table given below from year 2002 to 2008 and the actual turnover amount and market growth rate of chittagong stock exchange.A comparative statistics of DSE and CSE according to their listed securities, companies, mutual fund,debenture,bonds etc as on September 2008 given below:

rom graph 1 we can see that the highest value of market index is 14664.3967 and lowest value is 9995.5619. Here we can see that the hihgest valu of market index.

RESIGNATION
· A member may resign from the Exchanges by giving two month's notice in writing to the Chief Executive of the Exchange of his intention so to resign. The Chief Executive on receipt of such notice shall forthwith post it on the Notice Board for a period not less than one month for any objections that may be raised and received by the Chief Executive in writing. On the expiration of these one month, the CEO shall place the resignation with any objections received before th Board who may accept the resignation at their discretion. The Board shall not be bound to give any reason for their refusal to accept any resignation.

· On the acceptance of the resignation of a Member by the Board, such Member shall cease to be a member of the Exchange. His name shall be removed from the Register of Members of the Exchange and his card shall become the property of the Exchange.

The Board may by a EXPULSION & SUSPENSION OF MEMBERS
resolution expel any member of the Exchange -
· False Declaration: Who has in the opinion of the said Board made a false declaration in his application for admission to the membership.

· Criminal Offence: Who has been convicted of a criminal offence which in the opinion of the said Board, renders him unfit to be a Member of the Exchange.
Provided that such resolution shall be passed by a majority of three-fourth of the Members present at a meeting of the Board at which not less than one-half of all the Members of the Board shall have been present.

3. MEMBER OF AN ASSOCIATION
· Who becomes Member of, or subscriber to, or becomes shareholder or debenture-holder in any institution, association, Company, or corporation, or is directly or indirectly interested in such an institution establishing and functioning within the territorial limits of Chittagong where dealings in stocks, shares, bonus vouchers and like securities are carried on.

Explanation : For the purpose of this rule five or more members of the Exchange or their employees making any bid or offer or entering into any contract or transaction in stocks, shares and like securities before or after business hours or during holiday or at any place other than the floor of the Exchange shall be deemed to be members of an association other than the Exchange.

FINE AND PENALTIES
The Board shall by a resolution suspend any Members of the Exchange, who within fifteen days after notice in writing has been served upon him by the Chief Executive of the Exchange fails to pay any subscription or fine or penalty imposed upon him by the said Board in accordance with any Rule for the time being in force and the said Board shall expel any such member who within a further period of thirty days fails to pay any such subscription or fine or penalty or dues the Exchange.

Suspension of a Member
· Without prejudice to the scope of the power of suspension vested in the Board, a Member may also be suspended in the following circumstances: -

§ When, in the opinion of the Board, the Member conducts business in a manner prejudicial to the Exchange by making purchase or sale, or offers of purchase or sale, of securities for the purpose of upsetting the equilibrium of the market or bringing about a condition in which prices will not fairly reflect market values.

§ If, in the opinion of Board, the Member is in such financial condition that it should not be permitted to continue its business in consideration of safety either to its customer, creditor or to the Exchange.

§ Where a Member is reasonably suspected of having conducted itself in such a manner which calls for disciplinary action and/ or an investigation is being conducted into the affairs of the Member for this purpose.

The Board shall, under no obligation whatsoever, be liable to compensate a Member suspended under these Regulations even if the investigation subsequently vindicates the conduct of such Member.

· The suspension shall continue until the Member has been allowed by the Board to resume its business on its paying such deposit or doing such act or otherwise complying with the requirements or to fulfilling the conditions for doing business.

· A member shall be allowed to be heard by the Board, in addition to an opportunity for submitting its explanation, before being suspended. But, in all cases, decision of the Board shall be final and binding upon such Member.

RECONSIDERATION OF RESOLUTION OF EXPULSION
The Board may on its own motion or on an application recommended by three Members of the Board or at least 5% of the members of the Exchange reconsider and may cancel, revoke or modify such resolution. Such, resolution shall not be deemed valid or come into force unless it is passed by a majority of three-fourth of the members present at a meeting of the said Board specially summoned for the purpose at which not less than one-half of all the members of the said Board shall have been present and is confirmed by a majority of the Members of the said Board at subsequent meeting specially summoned.

NO ACTION MAINTAINABLE AGAINST NOTICE OF EXCHANGE
The Board may in their absolute discretion and in such manner as they think fit notify or cause to be notified to the Members of the Exchange or the public any resolution expelling or suspending a Member of the Exchange. No action or other proceeding shall under any circumstances be maintainable by by the member expelled or suspended against the Exchange or the said Board or any member thereof or any officer or staff of the Exchange for their publication or circulation of such notification.

CREDITORS OF EXPELLED OR SUSPENDED MEMBERS :
The expulsion or suspension of a member shall not affect the right of his creditors.

SUSPENSION/REINSTATEMENT/EXPULSION
· A suspended member will not during the tenure of his suspension exercise or enjoy any of the rights or privileges of Membership of the Exchange.

· Reinstatement: An application of a suspended member for reinstatement shall be considered by the Board in accordance with the rules for the time being in force.

· Business for or with person expelled: A Member shall not, without the special permission of the Board carry on business for or with a person who has been suspended or expelled from the Exchange.

EXPULSION ENTAILS FORFEITURE OR CARD, LIABILITIES TO SUBSIST
When a member of the Exchange is expelled, his Card or right of Membership and all his rights and privileges as member of the Exchange including any right to the use of or any claim upon or any interest in any property or funds of the Exchange, shall be forfeited to and become the property of the Exchange but any liability of any such members to the Exchange or to any member of the Exchange or to any creditors shall continue and remain unaffected even by his expulsion.

DISPOSAL OF FORFEITED CARD AND PROCEEDS THEREOF
A Card or right of membership which under any rule for the time being in force is forfeited to or vests in the Exchange, shall belong absolutely to the Exchange free of all rights, claims or interest of such member and the Board shall be entitled to deal with or dispose of the Card as the said Board may think fit. If the said Board sell such card, the sale proceeds thereof shall in the first place be applied to satisfying of the liabilities of the members, whose card is sold, to other members in respect of any contract made subject to the rules of the Exchange and the balance thereof shall be paid into the funds of the Exchange provided always that the Exchange may in their absolute discretion by resolution passed at a Board meeting direct such a balance to be disposed of or applied in such other manner as they may think fit.

However the summary of such matters to be reported to the Members annually in AGM
AUTHORISED ASSISTANTS
· The Board shall from time to time fix the number of Authorized Assistants, a member may be allowed to employ. The Authorized Assistants shall be allowed to be appointed up to 31st December each year and thereafter fresh applications will have to be made by the members for the continuation of such authorized assistants or otherwise.

· Members as authorized assistants members of the Exchange may even be employed as authorized assistants in excess of the number permitted by this rule. A Member so employed shall not himself be entitled to employ authorized assistants in place/substitution of his such position as assistants.

· Admission to authorized assistants A member desirous of obtaining admission to the market for authorized assistants shall apply for the permission of the Board in such form as the said Board may from time to time prescribe.

· The employer shall pay to the Exchange an annual subscription of Tk.1,000 (One Thousand) or such higher fee as may be prescribed by the Board from time to time in respect of such authorized assistants employed by him. No such subscription shall be payable in respect of a member, who acts as an authorized assistants.

UNATUHORISED ASSISTANTS EXCLUDED FROM MARKET'
· An authorized assistants is entitled to admission to the market and the assistant, who is not authorized, is not so entitled.

· An application by a member to employ an authorized assistants who previously had been acting as assistant to another member must be accompanied by a clearance certificate (NOC) from such former employer Member.

· The Board of the Exchange, may in its sole and absolute discretion, dispense with the condition of production of a "No Objection Certificate (NOC)" required by Rule 13(b) and may permit any person to work as an authorized assistants of any member of the Exchange under special/plausible circumstances.

POWER OF AUTHORISED ASSISTANTS
· An authorized assistants, or a member acting as authorized assistants, can transact trade or business only on behalf of his employer. They shall not make bargains in his own name or in any name other than that of his employer or sign contract in his own name or in any other name save on behalf or on account of his employer.

· The Board shall expel immediately an authorized assistants or a member acting as an authorized assistants who contravenes the norms, regulations of the Exchange and the aforesaid rule or ethics.

· Member liable for bargains of authorized assistants A member shall be liable for all bargains made with other members in the market by any authorized assistants employed by him and he shall fulfill such bargains according to the Rules of the Exchange in the manner as if such bargains had been made personally by the member himself.

REGISTER OF AUTHORISED ASSISTANTS
The Exchange shall keep a register of authorized assistants and shall enter in such register the name of the assistant and the member who employs him, the date of the beginning and termination of his employment or the withdrawal, expulsion of or such suspension of his authorization.

Chapter- 6
Overview of Sylhet Metro City Securities Limited

Sylhet Metro City Secuirities Limited (MSL):
Legal Status:
Sylhet Metrociti Securities Limited l995 Vides Registration No- 2103/95 the company started its operation from lst July, 1996.

Vision of MSL:
To become the most professional and country and to contribute significantly in the development of capital market throughout the country.

Mission of MSL:
· High standard expertise.

· Quick service.

· Professionalism.

· Skill Human Resources.

· Confidentiality.

· Continuous training and improvement.

· Locating share business facility in different prime location of the country with complete infrastructure and supports.

Nature of Business Activities:
The company is a security a member of Chittagong Stock Exchange (Membership 025) and in engaged in brokerage in the capital market.

Operation of Business:
The office of MSL is situated in Al-Marjan Shopping for buying and selling of shares, securities and debentures in favor of clients on commission basis along with providing complete service in capital market activities as a corporate member of Chittagong Stock Exchange. The company is also involved in activities of a full service Depository Participant (DP) of Central Depository Bangladesh Limited (CDBL).

Branches of MSL:
There are six branches of MSL in Sylhet division:
· Zindabazar Branch

· Millenium Extension

· Uposhohor Extension

· Shurma Tower Extension

· Gulaphgong Branch

· Kulaura Branch

· Guala Bazar Branch

· West World Extension

· Shibgonj Branch

Providing Highly Professional & IT Expert:
MSL has the full time professional & IT expert so that any kind of technical problem can solve quickly. As a result customer feels more satisfaction for constant service.

Basis of Accounting:
The accounts are prepared and maintained under the historical cost convention on a going concern basis and in accordance with companies Act, 1994 and Bangladesh Accounting Standards (BAS).

Revenue Generation:
Revenue is recognized based on share transactions amount which comprises of brokerage commission, Service Charges, transaction fees and capital gain. In case of interest of bank accounts and fixed deposit, revenue is recognized as the interest accrues unless collectibles is in doubt.

Taxation:
Under the income tax ordinance act 1984, MSL is subject to tax on income derived from share transaction amount of its trading activities. Provision for income tax has been calculated on the other income of the country. The company's trading income is subject to deduction of tax at source on brokerage commission as final settlement.

Trading and BO Account-Joint:
Two or more individuals own the account equally. lf one registered expires, his or her share of the assets in the account is owned by the Benedict's estate.

MSL allows clients to register accounts in a variety of ways:
Trading and BO Account-(Individual):
The account is registered to one person who is the sole owner of the assets in the account.

Documents Required Opening Trading/ BO Account:
For Individual-
1. Two copies of passport size photographs of the Account holders signature of the applicants must be furnished at the back side of the Photograph.

2. Passport size photograph of the nominee- (if any)

3. Name, client code and signature of the introducer

4. Name, client code and signature of the introducer.

5. Photocopy of passport/voter id/Driving License/Nationality certificate/

Employers certificate of the account holders.

6. Bank certificate containing name of the applicant, father & Mother name, Bank Account number and name of the bank.

For Non Resident Bangladeshi:
1. Two copies of passport size photographs of the Account holders signature of the applicants must be furnished at the back side of the photograph.

2. Passport size photograph of authorized person/power of attorney.

employer/Work permit/Residence permit/Trade License/valid work visa.

5. Foreign currencies Bank Account Statement containing father & mother name, Bank Account number.

7. Salary statement/Tax pays slip.

The Respective Officer Must Follow These Procedures to Open a Trading or BO Account:
Obtained completed and duly signed and filled trading and BO application form from the clients

Inform the settlement department upon the opening of the account when there is a trade order immediately.

Write the account number on the top of the application form when the account is opened

An authorized supervisor must sign the application form before formally opening the account.

Related Policies
1. Both individual and institution will be eligible to open Trading/BO Account

2. An individual client will be eligible to open a maximum of two accounts- one single account and one joint account with other eligible individual.

3. Institution will be eligible to open only one single Account

Chapter- 7
Findings of the Study
Findings of MSL:
· Information are computer based and online accessable.

· BO accounts are approved by the DSE & CSE under the controls of the SEC.

· Payments and Reciving of money are transparent.

· Brokerage houses of capital market under control of supervision of Bangladesh Govt.

· Prospective customers are eager to get information about MSL procedures but just

· Lacks of advertisement, people does not notice about the MSL. Any new comer can not notice it at a glance.

· This house is maintaining good relationship marketing but still we would suggest that it should put finger in this matter.

· There must be equal distribution of work. From my point of view some employees are performing too many duties and some are very few.

SWOT Analysis of MSL
SWOT analysis is a strategic planning tool to evaluate he Strengths, Weaknesses, Opportunities and Threats involved in a project or in a business venture. It involves specifying the objective of the project or business venture and identifying the internal and external factors that are favorable and unfavorable to achieve the objectives. The aim of the SWOT analysis is to identify the key internal and external factors that are important to achieve the objectives.

Strength:
Strengths are attributes of the organization that is helpful to achieve the organizational objectives.
· MSL has the reputation of being the provider of good quality services to its potential customers.

· MSL has qualified experienced and dedicated human resources as well as top management also.

· MSL is front-runner adopting any latest technology provided by CSE.

Weakness:
Weaknesses are attributes of the organization that are harmful to achieve the organization’s objectives.

As one of the oldest organization MSL has not much branches as they should.

Chapter- 8
Recommendation and Conclusion
Problems of Capital Market in Bangladesh:
The unexpected rise and fall in share prices mostly followed from the general confidence of the investors about political stability, euphoria of investment in shares, prospect of quick capital gains, a vacuum in respect of institutional presence in the share market, monopolistic dominance of member brokers, inefficiency of the Securities & Exchange Commission to cape with the developments, absence of proper application of circuit breaker etc. Delivery versus payment mechanism was used as one of the main vehicles of manipulation.

Although there are increasing trends in all the indicators, DSE, CSE are not free from problems, the problems of DSE, CSE may be summarized as under:

Price Manipulation:
It has been observed that the share values of some profitable Companies has been increased fictitiously some items that hampers the smooth operation of Stock market.

Delays in Settlement:
Financing procedures and delivery of securities sometimes take an unusual long time for which the money is blocked from nothing.

Irregulartion in Dividend:
Some companies do not hold Annual General Meeting (AGM) and eventually declare dividends that confused the shareholders about the financial positions of the company

Selection of Membership:
Some members being the directors of listed companies of DSE, CSE look for their own interest using their internal information of share market.

Improper Financial Statement:
Many companies do not focus real position of the company as some audit firms involve in corruption while preparing financial statements. As a result the shareholders as well as investors do not have any idea about position of that company.

Others:
The concept of centralization of the securities market has not been implemented that arise technical problems and political infighting. The intrinsic values for securities traded are sometimes estimated without considering the current market prices of the securities.

Conclusion:
The capital market is the market for securities, where companies and governments can raise long term funds. The secondary markets are where existing securities are sold and bought from one investor or speculator to another, usually on an exchange. Here I aimed at evaluating the growth of Bangladesh stock market over last decade in terms of some commonly used indicators of stock market development. In my analysis reveals that the Bangladesh's stock market is growing in terms of market capitalization to GDP, turnover ratio; value traded to GDP and number of listed companies, although the growth over time is not stable and has not yet assumed any obvious pattern. It also remains highly volatile and concentrated with foreign portfolio investment gradually disappearing. It is a market in which money is lent for periods longer than a year. The capital market includes the stock market and the bond market as well as consists of both the primary and the secondary market. The primary markets are where new stock and bonds issues are sold to investors.

The missing link between the SEC, Bangladesh Bank, Bangladesh Telecom Regulatory Commission and other regulatory bodies is now getting established. Individually, they were not serving each others' interests, and there was no effective coordination among them, hence the country was deprived of great initiatives. A dedicated financial market cell at the Ministry of Finance could be formed to coordinate with these regulators as well as other ministries.

The Bangladesh capital market still has a long way to go. The recent measures taken by the transitional government have already begun to positively impact the markets. If more investor-friendly policy reforms were to be implemented, the capital market will undoubtedly play a critical role in leading Bangladesh towards being the next Asian tiger In (SOEs) should be listed. The supply of securities can be increased if the SOEs are allowed to operate through the stock exchanges. Floatation of SOE scripts is expected to expand the market by couple of times. Corporation of SOEs will bring in transparency as well as confidence on the government financial system.

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