Alternative Trading Board (ATB)

 Alternative Trading Board (ATB)

 

The Bangladesh Securities and Exchange Commission (BSEC) has already approved the rules for ATB to pave the way of listing of non-listed companies, any kind of bonds, debenture, sukuk, open-end mutual funds and alternative investment funds with the ATB. Stock market stakeholders have welcomed the establishment of an alternative trading board as an important addition to the securities market and urged to develop the market to accommodate different investment vehicles for both the investors and issuers. The Dhaka Stock Exchange (DSE) has completed all the technical preparations to launch the Alternative Trading Board (ATB).

 

Short title.- (1) These rules may be called the Bangladesh Securities and Exchange Commission (Alternative Trading Board) Rules, 2018.

                        (2) These rules shall be applicable for all securities not listed with the main board or small capital platform of any exchange 

 

Definitions.- (1) In these Rules, unless there is anything depigment in the subject or context;-

(a) “Alternative Trading Board” or “ATB” means the facilities provided by an exchange for the purpose         of buying and selling of securities under these Rules;

(b) “ATB listed securities” means securities availing trading facilities in Alternative Trading Board of any exchange;

(c) “order” means sale or purchase order placed by a TREC Holder through the system;

 (d) “system” means any automated trading system of exchange;

(e) “unlisted securities” means any securities not listed with an exchange.

 

Buy or sale of securities at ATB.-

(1) Buy or sale of securities at ATB shall be conducted by or through a stock-dealer or stock-broker of an exchange.

(2) The exchange shall prominently display the following in front of its designated counter, or in its computerized system, as the case may be, on each trading day:

            (a) a full list of the securities available at ATB;

            (b) quantity of each security available for sale and purchase, the unit price offered by the seller or buyer.

(3) The stock dealer or stock broker shall place order in the system as per prescribed process of the exchange and settle the contract following the applicable settlement procedure.

 

Trading and settlement will be similar to the processes followed for the securities on its mainboard.

The DSE also announced, "To be on the ATB, securities must be in dematerialised form." That means electronic units of ATB scrips must be within the central depository system managed by Central Depository Bangladesh Ltd.Non-listed companies that want to get onto the ATB will have to prove their ability to comply with the Companies Act of the land, and the international standards for accounting and financial reporting.

 

Privately placed Sukuk and bonds will be eligible to be traded on the ATB.

 

The securities may include both common and preference shares of: non-listed companies, non-listed bonds, debentures, open-end mutual funds, and units of various alternative investment funds.Shares delisted from the stock exchanges and over-the-counter market stocks, too, can be bought and sold on the Alternative Trading Board.There are many securities outside stock exchanges and these also need to be transacted among investors.Investors are buying and selling them in private arenas, which mostly lack a convenient price discovery mechanism and both buyers and sellers suffer for the lack of liquidity.Liquidity is the convenience for the owners of any asset that they will find sufficient buyers if they plan to divest. Buyers look for competition among sellers.

Stock exchanges will have to play an active role to ensure the vibrant operations of Alternative Trading Board (ATB) launched to facilitate the growth of non-listed companies and other securities.

 

The ATB is a befitting initiative for the development of the capital market. Many small companies are doing good business. "There are more than 0.1 million registered companies in the country. But there is no platform to determine the value of their shares along with conducting trading," Many fresh investors will come to the market once the operation of the ATB starts. The stock exchanges have the scope of enhancing their profits through the successful operation of the ATB.The compliances will have to be ensured strongly in the ATB to create confidence among the investors. So that fresh investment scope will be created following the listing of small companies with the ATB. A successful ATB will enhance the exchange's revenue along with attracting foreign investments to the potential local companies. "Only the institutions and high net worth individuals should be inspired to make investments in the securities to be listed with the ATB," Small investors should not be inspired to make investment in the ATB because this type of investment is riskier than the investments made in the securities listed with the main board.

 

It’s a great opportunity, new investors will join the market because it will create opportunities of listing of non-listed companies, any kind of bonds, debenture, sukuk, open-end mutual funds and alternative investment funds. ATB will create opportunities for institutions to make investments in non-listed companies and other alternative investment vehicles like private equity and venture capital funds.The relevant stakeholders must leverage this opportunity.

 

We need to make transparent policies and guidelines to better leverage the benefits of these new investment opportunities created through ATB. We think this initiative will mark the start of a journey to include more people in investment environment. The importance of nurturing startup companies, SMEs and utilizing alternative investment funds like PE and VC funds to create many companies that can join the stock exchange in future and contribute to a significant portion of our GDP.

 

It is high time a board like ATB is created to develop the capital market."Compliance must be ensured in the ATB to create confidence among the investors. The capital market has much room for growth and ATB will facilitate fund allocation. ATB will help boost the securities market and increase allocation of funds to many local companies. Many small companies cannot raise funds due to lack of scale. ATB will alleviate this issue and create opportunities for many unlisted companies.

 

Under the ATB platform, all types of securities can be transacted except for the main board of the capital market and a small capital company with a minimum capital of up to Tk 5 crore. In this case, the definition of securities in The Securities and Exchange Ordinance of 1989 will be applicable.

In other words, any type of government securities defined in the Securities Act of 1920, mortgaged assets of the company, transferable shares, debentures, debentures stocks, bonds, investment contracts, derivatives, commodity futures contracts and options contracts can be added to the new platform.

Eighteen other companies — Bangla Process Industries, Dandy Dyeing, Dynamic Textile Industries, Metalex Corporation, Mita Textiles, Modern Cement, Modern Industries, Mona Food Products, Perfume Chemical Industries, Petro Synthetic Products, Pharmaco International, Quasem Silk Mills, Quasem Textile Mills, Raspit Inc Bd, Rose Heaven Ball Pen, Saleh Carpet Mills, Sreepur Textile Mills and United Air (BD) — have been sent to the ATB of the stock exchanges.

Investors are not allowed to get margin loans against purchase of shares under the ATB. I hopes that this will further increase the government’s revenue from the capital market. As well as being listed in the ATB, the corporate governance of the companies will be strengthened and the way of evading the revenue of the government will be closed.

 

However, it cannot be listed on ATB for the purpose of raising capital. ATB will only ensure the security of the seller’s money as a transaction platform as well as the acquisition of the buyer’s shares. The securities of this platform will be referred to as ATB listed securities.

 

In order to take advantage of transactions under this platform, the issuer concerned has to apply to the stock exchange. For this the issuer can hire a merchant banker. The stock exchange will decide on the acceptance or withdrawal of the application within 30 working days of receipt of the application.The Commission may suspend the trading of any securities on the ATB platform in the interest of the capital market and investors. Transactions of securities held in ATB will be completed in the approved process of stock exchange through stock dealer or stock broker. The stock exchange will categorize ATB’s trading platforms according to the type of securities. In this case, there will be two classes called auction and negotiation.

 

The stock exchange will determine all fees, commissions and charges applicable to ATB’s securities. With the approval of the Commission, the Exchange will determine the conditions for submission of report, disclosure and provision of information for ATB Securities. Subject to the prior approval of the Commission, the Exchange will publish the ATB Operational Handbook under the Act, which will be considered a part of the Act.

 

 

 

 

Delwar Hossain

Internal Auditor

Bashundhara Group