Tour Report on Chittagong Stock Exchange (CSE) Ltd.

P
a
g
e
|
42
Department of Finance & Banking, CU
CSE Selective Categories Index (CSCX)
Chittagong Stock Exchange (CSE) launched a new index named CSCX comprised A, B & G
category companies from 14
th
February 2004 to replace the earlier CSE Trade Volume Weighted Index. The new index
includes all but not the Z categories companies. This also e
xcludes the companys scrip which is debt securities, mutual fund, suspended for
indefinite period and non- traded for preceding six months of review meeting.
SWOT ANALYSIS
Here a brief subjective evaluation of CSE is done in the form of SWOT:

Strength:
The nationwide connectivity and recently the worldwide connectivity through the Internet is
the superiority over the other stock exchange of Bangladesh. Efficient management and
effective Corporate Governance gives CSE an edge over the competitor.

Weakness:
CSEs operation is less effective due to the lack of professional
attitude of the members, lack of Dhaka based member, non-availability of the dual listing
facilities, small number of active members, regional image problem, etc.

Opportunity:
With the
growth of Internet users and governments interest in the
capital market ushers new opportunity for CSE. As a member of SAFE, CSE will get the
opportunity to trade regional (Sough Asian) shares in future.

Threat:
New regulations of the different regulatory bodies (e.g. Government, SEC, Bangladesh
Bank, etc.) change the trade volume in the exchange. Besides connectivity to the Internet also
increased the security concern of the network.

Tour Report on Chittagong Stock Exchange (CSE) Ltd.

P
a
g
e
|
43
Department of Finance & Banking, CU
Chapter: 6

Problems and Recommendations

PROBLEMS

Most of the members of CSE are not rendering optimum services to the
investors.

Lack of saving i.e. lack of capital formation.

Inadequate govt. assistance.

Some stock exchange members also serve as director of listed companies. This can lead to the
chance of insider trading especially in such a poorly regulated market.

Some stock exchange members act only at brokers, i.e., they buy and sell on behalf of the
clients on receipt of specified trading commission. They do not undertake the market making
roles.

Stock market efficiency depends upon the availability of reliable and unbiased information
about the capital issue and companies. Though existing provisions in the companies act
ensure disclosure of adequate information though prospectus, but several defects are noticed
in practice.

Raising the number of curb operators.

Inefficiency of the SECS to cape with the developments,

Lack of interest of institutional buyers such as banks, lease companies and insurance
companies

Lack of proper and adequate disclosures

Certifiers of financial statements and Property values of the company are the identical

Management and Owners (Councilors) of CSE are entwined

Lack of enforcement with the compliance of rules and regulations

Corporate governance - sponsor-owners are managing the firm. All most all cases, no
professional management are hired to run the affairs of the listed company.

Tour Report on Chittagong Stock Exchange (CSE) Ltd.

P
a
g
e
|
44
Department of Finance & Banking, CU
RECOMMENDATIONS TO REMOVE THE
CSES
PROBLEM
1.
The dormant members of stock exchange should be surveyed very strictly. Such members
should be compelled to either trade or give up their membership. 2.
Market makers create both demand for & supply of securities and to the consistency in the
prices. So it is recommended to make necessary provisions in stock exchange by laws for
permitting
market makers activities.
3.
To minimize the chances of insider trading legal provisions should be made that, no stock
exchange member would be allowed to become directors of any listed company. 4.
In Bangladesh, we should follow the practices of developed capital markets & not allow curb
market anywhere. 5.
The average investor must have access to all information that might help the right investment
decision. SEC can institute either a set up or to encourage the formation of investors
associations under its umbrella. 6.
Increasing the govt. assistance and guidance can increase the efficiency of the organization.
7.
By increasing honesty and commitment of concern authority can
increase the investors encouragement to invest in capital market.
Credit rating enables the investors to judge the viability of the company for investment.
Bangladesh capital market can accommodate some credit rating agencies.

Tour Report on Chittagong Stock Exchange (CSE) Ltd.

P
a
g
e
|
45
Department of Finance & Banking, CU

CONCLUSION
A healthy, strong and stable stock market is highly desirable. The quintessence from
economic and political points of view is that continuous falling of share prices, unstable and
shaky stock market, tarnishes the image, goodwill, creditability, reputation and popularity of
the government in any country. With the dipping down of share prices, the hard-earned
popularity of the government of any country is also depleted and diminished slowly but
surely. At the end point of the report, we can say that the existing and potential sectors of
investment of Bangladesh are certainly lucrative and prospective. If proper initiatives are
taken by CSE it will provide huge contribution to the economy. CSE plays an important role
in the investment of various Public Ltd. Investors feel secured investing through CSE as it
offer to invest in the ready and strong sectors. Recently large companies are coming to IPO
(Initial Public Offering) through conversion of public Limited company. If all the profitable
sectors come to IPO CSE will play important in the overall investment sectors yet it has a
great impact on investment through capital market.

Tour Report on Chittagong Stock Exchange (CSE) Ltd.

Department of Finance & Banking, CU
SOME ABBREVIATIONA
BWS -Brokers Workstation
CSE
Chittagong Stock Exchange
IPO - Initial Public Offering

SEC

Securities & Exchange commission

MOP -Market Operation

NGTS -Next Generation Trading System

SEC

Securities & Exchange commission

T+O
Trading day

T+1
Trading day + The following day

T+2
Trading day + The successive 2 days

T+3
Trading day + The successive 3 days

T+4
Trading day + The successive 4 days

T
+9

Trading day + The successive 9 days

AGM
Annual General Meeting

BO
Beneficiary Owner