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CDS makes debut in bourses

Launching of scripless trading draws poor response from shareholders

STAR BUSINESS REPORT
The much-awaited central depository system (CDS) for electronic settlement of share trading made debut in the capital market yesterday.
But the launching received poor response from shareholders as only negligible number of Square Pharma securities are dematerialised or converted into electronic shares.
According to Central Depository Bangladesh Limited (CDBL), service provider of the system, 2,851 share certificates of Square Pharmaceuticals Ltd, the first listed company to come under the CDS, were dematerialised till yesterday out of a total of 7.58 lakh shares.
On the first day, a total of 100 shares of the company were transacted on the Chittagong Stock Exchange (CSE) and only six on the Dhaka Stock Exchange. The day's price closed at Tk 1770 on the CSE which was Tk 1740 on the previous trading day. The DSE closing price was Tk 1770 which was Tk 1720 on January 10, the last day of trading before suspension to facilitate dematerialisation.
A function to inaugurate depository participant counter of DSE ended in chaos when the DSE and the CDBL officials locked in alter-
cation over who is to blame for poor response from shareholders for dematerialisation.
The altercation erupted when DSE Member Ahmed Rashid Lali said the CDBL was poorly prepared to launch the CDS. Countering the allegation CDBL Managing Director and CEO M Habibus Samad said bourses were against the system.
SEC Chairman Mirza Azizul Islam had to intervene to end the chaos. He said the regulators have provided infrastructure support to all parties concerned for smooth launching of the system.
DSE President Ahmed Iqbal Hasan said the service provider failed to make investors understand the system. The CDBL should have launched awareness campaign to familiarise the scripless trading system.
"Why do not you consult Investment Corporation of Bangladesh?" he asked CDBL demanding assurance from it that market will have no crisis with limited number of tradable shares of Square Pharma.
The CDS will eliminate paper share certificates. The issuing companies will no longer require maintaining full-fledged share department in office. There will be no risk of fake, soiled, lost shares. It
will expedite share settlement and smoothen trading. Experts think the CDS launching is a milestone in the country's capital market.
Earlier, SEC on December 23 issued business commencement licence to the CDBL and asked it to launch operation from January 24. Meanwhile, the capital market regulators have issued licences to 32 brokers including the DSE and the CSE to become depository participants.
After Square Pharma, shares of other listed companies will be dematerialised in phases. A category and B category listed companies will get priorities.
Briefing newsmen after the inauguration, DSE CEO Salahuddin Ahmed Khan said bourses are eager to adopt the system but service provider should have been much prepared and organised before launching.
"Strict procedure for dematting shares, which include providing some confidential information by the shareholders like TIN, passport number and bank account, might have discouraged most of the shareholders for the dematting of their shares," he said urging the CDBL to simplify the form.
CSE CEO Wali-ul-Maroof Matin told The Daily Star the CDS is a new
step towards real online transaction in the capital market.
"It will help regain investors' confidence and contribute to revitalising the capital market. Though low number of shares are de-matted the number will increase gradually," he said.
SEC Chairman said he is satisfied with the first day of transaction under CDS. "Many speculated that there will be no trade on the opening day and the market will see a price fluctuation but nothing such happened," he said after end of yesterday's trading.
About negligible number of share de-matting, he said the volume will increase when sponsor shareholders will start the process in bulk. "There is no reason to be scared for investors as the market is stable," he said.
DSE CEO Salahuddin Ahmed Khan said the bourse will talk with the SEC on how to speed up the dematting.
CDBL Managing Director M Habibus Samad said their system worked well on the first day. "So far 2,851 shares have been de-matted and we have got 53,401 de-mat requests. We are hopeful that the de-matting will see a jump in two or three days as most shareholders are observing the market under new system," he said.