Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) are the two Bangladeshi stock exchanges

doing their operation in Dhaka and Chittagong. Like other countries stock exchange they are doing there operations under Security Exchange Commission (SEC). DSE and CSE are doing a job of a middleman in the financial world. They provide the surplus unit to lend money where as to the deficit unit to borrow money. In short the DSE and CSE are doing a job that links the surplus unit to the deficit unit. In this term paper we are going to talk about the appraisal of DSE and CSE. First of all, we will talk about the background of these two giant stock exchanges along with that we will talk about the enrollment procedure of DSE and CSE. As we know that for every company who wants to enroll in stock exchange they must first list their name in the stock exchange so, we will briefly discuss about the listing procedures too.

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1.1 The origin of the report:

This term paper is prepared for Md. Lutfur Rahman, Assistant Professor and Assistant Proctor, Department of Business Administration of East West University. This term paper is prepared as a partial requirement of FIN-335 (Financial Institutions and Markets) course for the semester of summer 2011.

1.2. Objective of the study

Here we have only looked at the Appraisal of DSE and CSE. So the specific objectives are To give detailed information about DSE and CSE. To focus on the major activities of DSE and CSE. To know how they operate in our country. To know briefly about their rules and regulation. And Their performance in our country.

1.3. Scope of the study

Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) is the only two stock exchange we have in our country and for that we can easily get as much as information we need. Here we discuss about the basic idea of DSE and CSE along with that we will discuss about the performance of these two giant stock exchanges and then we will talk about some extra-ordinary features of these two stock exchanges.

1.4. Methodology
The report is based on information collected from secondary source of data, by using DSE and CSE web sites. Along with that we consulted with our Hon able course instructor. The data collected from the some other sources too. These ares Dhaka Stock Exchange Monthly Review Chittagong Stock Exchange Monthly Review CSE portfolio.

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1.5. Limitations of the study

The major limitations encountered are: Lack of experience has acted as constraints in the way of meticulous exploration on the topic. Time wasnt enough to complete such a complicated topic. Relevant papers and documents were not available sufficiently. In many cases up to date information is not available.

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2.1 Beginning of DSE and CSE

Bangladesh has two Stock Exchanges, Dhaka Stock Exchange (DSE), where trading is conducted by Computerized Automated Trading System and Chittagong Stock Exchange (CSE), which is also conducted by Computerized Automated Trading System . All exchanges are self-regulated, private sector entities which must have their operating rules approved by the SEC. The Securities and Exchange Commission (SEC) was established on 8th June, 1993 under the Securities and Exchange Commission Act, 1993. The Chairman and Members of the Commission are appointed by the government and have overall responsibility to administer securities legislation. The Commission, at present has three full time members, excluding the Chairman. The Commission is a statutory body and attached to the Ministry of Finance. Dhaka Share Market consists of the Dhaka Stock Exchange or DSE, the main share market of Bangladesh. DSE is situated at the main market place of Dhaka, capital of Bangladesh, called Motijhil. Dhaka Share Market formally started its trading in the year 1956 even before the formation of Bangladesh as a country. Dhaka Share Market is still at its infant stage and has to walk a long way for coming into the radar of the Global Financial Market. The Chittagong Stock Exchange (CSE) began its journey in 10th October of 1995 from Chittagong City through the cryout trading system with the promise to create a state-of-the art bourse in the country. 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, 1995 for establishing the country's second stock exchange. Stock Exchanges are mutual organization that facilitates trading of company stocks and securities to the stock brokers and traders. The stock exchanges deals with the issue of securities and other financial instruments. The stock exchanges also involves in the payment of income and dividends. The role of the stock exchange is to raise capital for businesses, mobilize savings for investment,

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facilitate company growth, and redistribute wealth as well as raising capital for financing the development projects of the government.

2.2 Legal Basis

The Dhaka Stock Exchange (DSE) is registered as a Public Limited Company and its activities are regulated by its Articles of Association rules & regulations and bye-laws along with the Securities and Exchange Ordinance - 1969, Companies Act - 1994 & Securities & Exchange Commission Act - 1993. As legal entity CSE is a not-for-profit public limited company. All of its 129 members are corporate bodies. It has a separate secretariat independent of policymaking Board. The Board comprises of brokers and non-brokers directors with equal proportion to ensure the transparency. The Board constituted Committees to delegate such functions and authority as it may deem fit. There is an independent secretariat headed by a full time Chief Executive Officer. CSE activities are regulated by its own regulations and bye laws along with the rules, orders and notification of the SEC.

2.3 Organizational Structure of DSE and CSE

Fig: Organizational Structure f DSE and CSE

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2.4 Objectives of DSE and CSE

2.4.1 Objectives of Dhaka Stock Exchange

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. 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). Announcement of Price sensitive or other information about listed companies through online. Objective of Chittagong Stock Exchange

2.4.2

Develop a strong platform for entrepreneurs raising capital; Provide a fully automated trading system with most modern amenities to ensure: quick, easy, accurate transactions and easily accessible to all. Undertake any business relating to the Stock Exchange, such as a clearing house, securities depository center or similar activities; Develop a professional service culture through mandatory corporate membership; Provide an investment opportunity for small and large investors; Attract non-resident Bangladeshis to invest in Bangladesh stock market; Collect preserve and disseminate data and information on stock exchange; Develop a research cell for analyzing status of the market and economy.

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2.5 Listing Procedures in Stock Exchange

Listing requirements are the set of conditions imposed by a given stock exchange upon companies that want to be listed on that exchange. Such conditions sometimes include minimum number of shares outstanding, minimum market capitalization, and minimum annual income. It is obvious that the listing procedure of all companys in either DSE or CSE follows same procedures. Any company who wants to list their name in the stock exchange they must have to go through the Initial Public Offerings (IPO). The listing requirement that have been prescribed by the SEC is based on the following criterias Every company intending to enlist its securities to DSE by issuing its securities through IPO is required to appoint Issue Manager to proceed with the listing process of the company in the Exchange; The Issue Manager prepares the draft prospectus of the company as per Public Issue Rules of SEC and submit the same to the SEC and the Exchange(s) for necessary approval; The Issuer is also required to make agreement with the Underwriter(s) and Bankers to the Issue for IPO purpose; After receiving the draft prospectus, the Exchange examine and evaluate overall performance as well as financial features of the company which may have short term and long term impact on the market; The Exchange send its opinion to SEC within 15 days of receipt of draft prospectus for SEC's consideration; After proper scrutiny, SEC gives it consent for floating IPO as per Public Issue Rule; Having consent from SEC, the Issuer is required to file application to the Exchange for listing its securities within 5 days of issuance of its prospectus; On successful subscription, the company is required to complete distribution of allotment/refund warrants within 42 days of closing of subscription; After 100% distribution of shares/refund warrants and compliance of other requirements, the application for listing of the Issuer is placed to the Exchange's meeting for necessary decision of the Board ;

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2.6 DSE and CSE INDICES There are three categories for the DSE indexes. These are DSI: DSI represent the DSE all Share Price index for the Dhaka Stock Exchange (DSE). DGEN: It represents the General Index of DSE. This includes the all stocks of the DSE except the Z categories. DSE 20: DSE 20 is an index where the best twenty stocks are listed. The best twenty performing stocks information, movement, overall information is provided here. There are two types of CSE index. These ares CSE 30: CSE 30 is an index where the best thirty stocks are listed. The best thirty performing stocks information, movement, overall information is provided here. CSCX: It represents the Chittagong Special Categories Index. Here all the stock including the Z category stock is also included.

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3.1 DSE MILESTONES Milestones of DSE

Incorporated as East Pakistan Stock Exchange Association Limited Starting Formal Trading Re-name as East Pakistan Stock Exchange Ltd. Re-name as Dacca Stock Exchange Ltd. Trading Restarted in Bangladesh Starting of DSE all Share Price Index Calculation DSE all share Price Index Calculation Started on the Basis of IFC designed Formula Starting of Automated Trading Starting of DSE 20 Index Starting of CDS Starting of GOVT. Bond Market DSE All Share Price Index Re-introduced Direct Listing (Dhaka Stock Exchange Ltd.) Regulation 2006 Introduced DSE Chittagong Office Inaugurated 28 April, 1954 1956 23 June, 1962 13 May, 1964 16 August, 1976 16 October, 1986 1 November, 1993

10 August, 1998 1 January, 2001 24 January, 2004 01 January, 2005 28 March, 2005 12 March, 2006 22 November, 2007

DSE Sylhet Office Inaugurated Book-Building Method Has Been Introduced

30 March, 2008 2010

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3.2 DSE Main Board

The DSE main board includes the number of listed securities, companies, mutual funds treasury bonds and corporate bonds. The following table will show the Number of Shares/ Certificate issued and amount, issued capita, total market capitalization and conversion rate of these of DSE.
Main Board as on December 2010
Total Number of Listed Securities Total Number of Companies Total Number of Mutual Funds Total Number of Debentures Total Number of Treasury Bonds Total Number of Corporate Bonds

445 218 31 8 186 2 (No. in mn) 14,419 12,335 2,075 (No. in ' 000) 409 4,213 4,336 (Figure Tk.in mn) 664,242 216,487 21,066 140 422,213 4,336 (Figure Tk.in mn) 3,471,109 3,001,334 43,064 576 422,213 3,922 70.63 (FigureUS$ in mn) 9,404.53 3,065 298 2 5,978 61 (FigureUS$ in mn) 49,145 42,494 610 8 5,978 56

Total number of Shares/Certificates:

Total Number of Shares & Mutual Fund Certificates of All Listed Securities* Total Number of Shares of All Listed Companies Total Number of Certificates of All Listed Mutual Funds Total Number of All Listed Debentures Total Number of All Listed Gov. T-Bonds Total Number of All Listed Corporate Bonds

Total Issued Capital of :

All Listed Securities All Companies Shares All Mutual Funds All Debentures All Listed Govt. T-Bonds All Listed Corporate Bonds

Total Market Capitalization of:

All Listed Securities All Listed Companies Shares All Listed Mutual Funds All Debentures All Listed Govt. T-Bonds All Listed Corporate Bonds

Conversion Rate: BDT against USD

3.3 DSE clearing and Settlement Process

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The Clearing and Settlement module provides the management of trade from the point of entry into the Settlement Pool trade database until it has been delivered, settled and removed from the Settlement Pool. It consists of three major business processes. Clearing: participant trade reporting, affirmation, billing and assigning settlement instructions. Settlement: the process of overseeing that delivery of all instruments to the buyer and payment of all moneys to the seller has occurred before removing the trade from the settlement pool. Regulation 4 of the Settlement of Stock Exchange Transactions Regulation 1998 has been given effect time to timeHere is a complete picture of the settlement system for all of our 427 Instruments in Five (5) groups in the Four (4) markets. A Group: Number of Instruments are 338 (150 + 8D + 22M + 158TB), Here D for Debentures, M for Mutual funds & TB for Treasury Bonds (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility for scrip only through DSE Clearing House on T+1, T+3 basis). "A" and "DA" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading Software.

Fig: Clearing and Settlement -01

B Group: Number of Instruments are 44(Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "B" and "DB" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software. - 11 -

G Group: Number of Instrument is 0 (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "G" and "DG" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software. N Group: Number of Instrument is 11(Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "N" and "DN" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software. The above cycle is valid for A, B, G & N category instruments traded in Public, Block & Odd-lot market.

Z Group: Number of Instruments are 34(Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+9 basis). "Z" and "DZ" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

Fig: Clearing and Settlement-02 This cycle is valid only for Z group instruments traded in Public, Block & Odd-lot market.

3.4 DSE Performance

Dhaka Stock Exchange (DSE) is a center for lending and borrowing money. Based on that lending and borrowing money we can evaluate the performance of the DSE. Lets look at some data of DSE which is for January-December 2010- 12 -

DSE Performance: January, 2010 to December, 2010 DSE Turnover Month For 2010 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Value (Tk in mn.) 262869.41 249982.12 175115.99 191303.18 386238.36 387733.65 322769.28 394438.07 312562.35 468008.97 471717.20 387174.09 Value (in mn.) 1020.70 953.64 747.99 700.63 1013.99 1203.94 1163.22 1793.43 1602.83 2265.35 2233.33 2275.47 Ratio of Mkt. Capital To Trn. 0.12 0.11 0.08 0.08 0.08 0.14 0.11 0.13 0.10 0.14 0.13 0.11 DSI Index DGEN DSE 20

4422.81 4549.60 4573.81 4641.54 5030.05 5111.63 5278.89 5555.49 5930.90 6612.14 7135.16 6877.66

5367.11 5560.56 5582.33 5654.88 6107.81 6153.68 6342.76 6657.97 7097.38 7957.12 8602.44 8290.41

3030.19 2992.93 2952.01 3039.17 3432.23 3650.04 3721.78 3874.50 4137.93 4533.18 5119.13 5204.98

The performance of the DSE is shown in an index moving graph-

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IN DEX M OVEM T-2010 EN

10000 9000 DSE INDICES 8000 7000 6000 5000 4000 3000 2000 1000 0
R JU L A U G JU N Y T V N O JA N P R E P O C F E A A M M D E A S C B

Series1

Series2

Series3

Graph 01: Index Movement for the Year 2010 As we can see that the index movement for 2010 is so so with respect to time. Here series 1 is the DSE 20 index which starts from a lower scale and then it goes upward at the very end of the year. Series 2 represents the index of DGEN where all companies are listed except the Z categories. Its index is pretty good. It range from the 5000-8000 for the month January-December in the year 2010

3.5 DSE Market Outlook

We have collected a data on market outlook of the DSE for the year of 2005-2011. The data we have collected will clarify a general view of the DSE for these years. - 14 -

DSE MARKET OUTLOOK Item Unit 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Exchange Turnover Foreign Turnover DSE Market Capitalization

TK. Crore Trade TK. at Crore TK. Crore

4599.35

16467.4

54323.9

89378.92

256350.5

235667

68.56

989.53

1922.42

1183.92

1869.85

1889.54

21542.1

47585.5

93102.5

124133.8

270074.4

350800.5

Simple Weight Percent Avg. Dividend Market Yield Weighte d Avg. Market PE Weighte d Avg. Market Capt. to Percent GDP (Ratio)

15.92

16.37

19.54

21.78

28.72

21.00

4.15

2.85

1.94

2.17

1.70

1.56

10.66

17.28

22.80

18.44

24.08

29.16

5.18

10.18

17.18

20.19

43.92

50.67

3.6 Most Active Members in DSE

In every quarter the members of DSE change. The members of DSE has to perform well with there organizational performance. The most active member of DSE will be chosen from those criteria. In a survey we found that the most active members in DSE in December, 2010 areMost Active Members-December, 2010 SL. Name Member Member Position in

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No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

LankaBangla Securities Ltd. ICB Securities Trading Co. Ltd PFI Securities Ltd. BRAC-EFL Stock Brokerage IDLC Securities Ltd. AL-Arafah Islami Bank Ltd. MTB Securities Ltd. Multi Securities & Services Ltd AB Securities Ltd. BLI Securities Ltd. International Leasing Shahjalal Islami Bank Ltd. Wifang Securities Ltd. National Bank Ltd. Bank Asia Ltd. I. & I. Dev. Fin. . NCC Bank Ltd. CMSL Securities Ltd. Mercantile Bank Ltd SES Company Ltd.

Number 132 129 079 011 058 234 197 075 201 175 009 233 210 203 237 238 061 113 224 163

Code DSELAN DSEIST DSEPFI DSEEPL DSEISL DSEAIB DSEMTB DSEMUL DSEABF DSEBLI DSEILS DSESJB DSEWSL DSENBL DSEBAL DSEIID DSENCC DSECAM DSEMBL DSESES

Dec, 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Nov, 10 1 2 4 6 5 3 10 8 21 20 11 9 12 7 13 14 15 16 18 17

3.7 Total Turnover of DSE in 2009-10

The total turnover of all the listed securities at the Dhaka Stock Exchange Limited has stood at Tk 2563.50 billion on 30 June, 2010, which was Tk 893.79 billion on 30 June, 2009. Total turnover at the premier bourse of the country has risen by 186.81 per-cents in 2009-10 compared with 2008-09

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fiscal year. On the other hand, in 2009-10 periods a total of 10,132.88 million securities have been traded at the Dhaka Stock Exchange Limited against 5,757.86 million registering 75.98 per-cent rises over the corresponding period of time.

3.8 Sectoral Performance in DSE

The sectoral performance of DSE has been created on the basis of the different sectors of DSE. These are Financial Sector, Manufacturing, Service and Miscellaneous, and Bond. The market capitalization Taka in million are given along with the November and December, 2010 data with the percentage. On the other part we have included the turnover of DSE in November and December 2010 along with that the Percentage is also given of the total turnover. DSE Sectoral Performance December, 2010 Mkt. Capitalisation Tk. In Million Turnover Tk. In Million Dec, 10 Nov, 10 % of Dec, 10 Nov, 10 % of M. Total Capital Turnover FINANCIAL SECTOR 1000969.48 922523.59 32.66 157080.73 183519.73 40.57 390533.99 394603.50 12.74 41644.50 64678.16 10.76 182685 188402.12 5.96 32980.96 50819.21 8.52 44457.56 36513.10 1.45 13588.82 8117.11 3.51 1618646.03 1542042.30 52.81 245294.92 307134.22 63.36 MANUFACTURING 64976.26 65146.44 2.12 29013.95 8280.25 1.78 205748.74 224008.34 6.71 6899.15 15779.85 3.21 125548.09 125792.28 4.10 12426.17 28487.96 7.49 137274.84 124196.89 4.48 19197.53 8664.17 4.96 55234.36 58757.29 1.80 1010362 34.73 2.61 16715.64 18682.10 0.55 1792.68 137.06 0.46 1261.60 1271.10 0.04 75.04 13256.35 0.02 1058.99 1342.68 0.03 190.98 22366.16 0.05 72990.84 680809.36 77454.72 696651.83 2.38 22.21 6111.73 85810.86 3913.21 100919.40 1.58 22.21

Sector

Banks Financial Inst. Insurance Mutual Funds Total Foods Pharmaceuticals Textile Engineering Ceramics Tannery Paper & Printing Jute Cement Total

SERVICE & MISCELLANEOUS Fuel & Power 294353.64 320578.69 9.60 27095.45 34118.94 7.00

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Service & Real Estate IT Telecommunication

30179.58

35049.48

0.98

2537.90

4030.774

0.66

5259.32 331903.75

4086.90 316915.42

0.17 10.83

1301.70 7856.98

1450.42 3786.23

0.34 2.03

Travel and Leisure Miscellaneous Total

15477 84639.55 761812.84

14858.00 88292.15 779507.63 BOND

0.50 2.76 24.85

5191.26 11982.33 55965.62

2415.53 17801.00 63602.86

1.34 3.09 14.45

Corporate Bond Total Grand Total

3922.28 3922.28 3065190.51

3822 3822 3022024.17

0.13 0.13 100

90.73 90.73 387174.09

60.63 60.63 471717.11

0.02 0.02 100

3.8 IPO Scenario

A total of 18 companies floated IPOs worth TK. 26536.59 million in 2010 while the number of IPOs were 18 in 2009 with an amount of TK. 23145.32 million. Of the total IPO amount TK. 11529.52 million was offered for the public and TK. 8335.64 million for the sponsors. Year 2010 2009 2008 IPO Issues 18 18 12 Issued Cap. Pub. Offer* 26536.59 11529.52 23145.32 8917.26 8270.00 3043.41 * Pre IPO is not Considered ** 16 Companies Value Sponsors 8335.64 15250.57 4260.00 Pub. Subs. 108555.55** 68265.94 37821.71

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IPO & Listing 2007-2010

30 25 20 15 10 5 0 IPO Listing 1 14 14 2 12 15 IPO 3 18 15 Listing 4 18 25 Listing, 15 IPO, 14 Listing, 14 IPO, 12 IPO, 18 IPO, 18 Listing, 15

Listing, 25

Graph 02: IPO and Listing Scenario

3.9 Business Growth of DSE

Here we will discuss about the business growth of DSE and it includes the growth pattern of DSE based on the daily avg. trading value and the market capitalization. It also includes the growth pattern of DSE based on the trading value and quantity along with that a GDP growth and market capital to GDP ratio. Here we will analyze the growth on the basis of the trading value-market capitalization, trading value-trading quantity, GDP growth- MKT. capitalization to GDP ratio. These are given as follows. First of all we will see a data table and then the graphs will be given-

BUSINESS GROWTH OF DSE

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No. Year listed

of No. of No. of No. of Traded Compa- Trading Trades nies Days (mn.)

Trade

Avg. Daily Trade Value

Trade Mkt. Size Capital. (mn.)

securities

Quantity Value

2001 2002 2003 2004 2005 2006 2007 2008 2009

249 260 267 256 286 310 350 412 415

211 226 240 226 241 267 273 292 292

268 287 286 266 258 228 237 237 244

--2646169 1400137 2159652 2483220 3001540 8167229 1505768 6 2827975 4

1107 1309 613 684 883 883 2831 4605 7973

39869.29 34984.92 19152.27 53492.10 64863.64 65079.10 322867.07 667964.82 1475300.88

149 122 67 201 251 285 1362 2818 6046 13221 13679 24769 26121 21682 39532 44360 52168

63530 68680 97440 224160 228570 315446 742196 1043799 193228

Now we will see the growth pattern of the DSE during the year of 2001 to 2009.

Growth Pattern of DSE

1 200000 1 000000 800000 600000 400000 200000 0 1 2 3 4 5 Y ear Daily Avg. Trading Value M arket Capitalization 6 7 8 9

Graph 03: Growth Pattern of DSE

4.1 CSE MILESTONE

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12th February 1995 1st April 1995 10th October 1995 1st January 1996

Bangladesh Government approved CSE Incorporated as a limited company Floor Trading started Became corresponding member of World Federation of Exchanges (Former FIVB) First bourse to automate the nationwide trading system Established CSE Investor Protection Fund Convened SAFE Sponsored Central Depository Bangladesh Ltd. (CDBL) Internet Trading Service opened Over- the-Counter market opened

2nd June 1998 1999 16th January 2000 26th January 2004 30th May 2004 4th July 2004

4.2 CSE Clearing and Settlement Process

The member shall settle the trade in which the member has dealt in according to Settlement Obligation Statement prepared by the Clearing House of CSE. The Clearing House shall prepare the statement to work out the settlement position of the member from processing of information in respect of the securities transaction carried out by Member on each trading day. In processing the information the Clearing House shall arrange the securities in the following categories and with the system applicable for settlement of each category of the securities:

4.2.1 A-category companies (a) Companies, which are regular in holding the current annual general meetings and have declared dividend at the rate of ten percent or more in the last English calendar year and have paid the dividend within sixty days from the date of declaration and have submitted the requisite compliance report to SEC confirming the paying off the dividend within seven working days from

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the date of completion of disbursement shall be described as A-category companies. Mutual Funds and Debentures shall also be placed in A- category. (b) In case of a company already placed in A- category, its share shall be placed in Z- category from the next day of submission, or expiry of the date of submission, of the requisite compliance report to SEC, if it is found that the company has failed either to pay off the declared dividend or to submit the said report thereon within the time limits prescribed in the erstwhile CCIs Notification NO. SRO.385-Law/91 dated 15th December, 1991 read together with section 2G of the Securities and Exchange Ordinance, 1969 (XVII of 1969), for whatever reason. 4.2.2 B- category companies (a) Companies, which are regular in holding the annual general meetings but have declare dividend below ten percent in the last English calendar year and have paid the dividend within sixty days from the date of declaration and have submitted the requisite compliance report to SEC confirming the paying off the dividend within seven working days from the date of completion of disbursement shall be described as B- category companies, (b) In case of a company already placed in B-category, its share shall be placed in Z -category from the next day of submission, or expiry of the date of submission, of the requisite compliance report to SEC, if it is found that the company has failed either to pay off the declared dividend or to submit the said report thereon within the time limits prescribed in the erstwhile CCIs Notification NO. SRO.385-Law/91 dated 15th December 1991 read together with section 2G of the Securities and Exchange Ordinance, 1969 (XVII of 1969), for whatever reason.

4.2.3 N-category companies All newly listed companies except Greenfield companies shall be placed under N-category companies for which the settlement procedure followed for B- category companies shall be applicable.

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4.2.4 G- Category Companies (I.E. GREENFIELD COMPANIES) (a) Newly listed shares of those companies, which do not fall under any of the Categories, mentioned under 1.1, 1.2, 1.3 and 1.5, shall be placed under G - category companies for which the settlement procedure followed for B- category companies shall be applicable: (b) In case of failure to declare dividend the shares of such companies shall continue to remain in this category until the date of the annual general meeting held after completing two full years from the date of commercial operation, as disclosed in the prospectus. 4.2.5 Z- category companies (a) Companies, which failed to hold the current annual general meetings or have failed to declare any dividend or have declared dividend but failed to pay it off within 60 days from the date of declaration or failed to submit the requisite compliance report to SEC regarding disbursement of dividend within seven working days from completion of such disbursement date for whatsoever reason or companies which are not in operation for more than six months or whose accumulated loss after adjustment of revenue reserve, if any, is negative and exceeded its paid-up capital shall be described as Z- category companies: (b) The words or whose accumulated loss after adjustment of revenue reserve, if any, is negative and exceeded its paid-up capital mentioned in the above sub- regulation (a) shall not be applicable for the companies which have declared dividend out of the current profits in the last English calendar year and held annual general meeting(s) relating to all outstanding financial year (s) despite having such accumulated loss exceeding the paid up capital. (c) In case of a company already placed in Z-category and declares dividend, its share shall be placed in A or B category, as the case may be, from the next day of submission of the requisite compliance report to SEC confirming paying off the declared dividend within limits prescribed in the Notification NO. SRO.385-Law/91 dated 15th December, 1991 read together

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with section 2G of the Securities and Exchange Ordinance, 1969 (XVII of 1969) provided there is no defaulted annual general meeting of the company. (d) The chief executive officer of the Exchange may bring any other company under this category, if deemed necessary, with the prior written consent from the Commission.

4.3 The Enrollment Process of CSE:

ELIGIBILITY

Membership of CSE facilitates a person prospects to become trading members (stock brokers) of the Exchange through compliance of the regulatory provisions of CSE and SEC. There are 135 members in CSE all of whom are corporate bodies. The eligibility criteria for the membership are presented below: A corporate body with a minimum paid up capital of BDT 2.5 million Any partner or director thereof as the case may be is/has not Less than twenty-one years of age; Bankrupt; Person of unsound mind; Person convicted by a competent court of an offence involving moral turpitude. Found at any time by SEC or any stock exchange or court involved in any misconduct in respect stock exchange transaction/market Individual may apply and receive membership on condition that they form a corporate body within a specified time, usually 6 months from the date of the allotment letters issued to them.

BROKERS/DEALERS

The trading platform of a stock exchange is accessible only to broker, dealer and their authorized representative. At present Dealers can perform transaction on their own account only while brokers act as agent of their client.

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 Broker and Dealers shall be eligible to trade in CSE when it: Becomes a members of the CSE; Becomes members of the CSE Clearing House; Is not otherwise barred by CSE or SEC A broker, dealer or their authorized representatives complies with Code of conduct prescribed by SEC. COMPLIANCE WITH RESPECT TO BROKERS/DEALERS

The CSE brokers/dealers are required to comply with various requirements for continuing membership. These include: Submission of: Audited Annual Accounts within four months of the end of the financial year; Monthly Net Capital balance Report; Shareholding pattern by-yearly; Any changes in respect of management, structural or legal status of Stock dealers/ stock brokers should be informed to the Commission within 15 (fifteen) days through stock exchange; Compliance Authority report relating to the compliance of rules and regulations of the Exchange and SEC by his/her Member Company. The report will have to submit to the Exchange within 15 days after the end of every six-month period ending on 30th June and 31st December of the year. Maintenance of the net worth at least half of its paid up capital at all times. Renewal of their license annually with SEC. AUTHORISED REPRESENTATIVE

CSE broker/dealer may appoint Authorized Representative who is registered with CSE and SEC to act as an agent for doing all the activities related to buy and sell of securities through the stock exchange. The Authorized Representatives shall-- Not be less than twenty-one years of age; Have education qualification of HSC or equivalent;

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 Not be adjudicated as an insolvent Not be a person of unsound mind; Not be convicted by a competent court of an offence involving moral turpitude; Not received punished from the Commission or Stock Exchange. COMPLIANCE AUTHORITY

Every Broker/dealer shall appoint one of its director or Chief Executive Officer as compliance Authority for a period not exceeding three years at a time subject to the following: He/she is not convicted of any criminal offence involving moral turpitude by a competent court; He/She has not been found by the Stock exchange or court involved in misconduct in respect of transaction in any security He/ She have obtained at least graduation degree. DISCIPLINARY ACTION AGAINST MEMBER

CSE may exercise any of its following disciplinary powers against a member if the member or its director, authorized representative or employee commit any act or omission as mentioned in the Regulation 79 of the General Rules and Regulations of CSE. Warning Penalization; Temporary prohibition from performance;

4.4 Market Performance of CSE

Here we will see that how the performance of CSE market varies depending on various indexes and analyze on the basis of the turnover value, market capitalization and so on. The following data table is based on the information on January to March 2011. Description
CSE All Share Price Index CSE 30 Index CSCX Index

Market Performance of CSE : Jan-Mar, 2011 JAN-MAR OCT-DEC 2011

17758.67 14926.10 11459.11

2010
23448.99 20988.17 15156.37.37

Quarterly Change (+/-) (%)

-5690.32 -6062.07 -3697.26 -24.27 -28.88 -24.39

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Total Turnover Value(TK. mn) Total Turnover

62039.23 852.07 640.04 2268.25 31.15 228 10 215 3 1051.15 10.85

129549.73 1811.88 8475.54 2983.93 41.73 221 133 84 4 2159.16 14.13 60 2.25 29.15

-67510.50 -959.81 -207.51 -715.68 -10.58

-52.11 -52.97 -24.84 -23.39 -25.35

Value(USD. mn) Total Turnover Volume(No. mn) Market Capitalisation(Tk. Bn) Market Capitalisation(USD. Bn)

Issues Traded sIssues Gained Issues Declined Issues Uncharged Avg. Daily Turnover Value Avg. Daily Turnover

-1107.65 -3.28 -1 0 -8.70

-51.30 -32.30 -1.68 -29.85

Volume 59 No. of Days Traded 2.25 Cash Dividend Yield 20.45 PE Ratio Doller Conversaton Rate= TK. 72.81 TK. Mn= Taka in million, TK. Bn= Taka in Billion USD= United State Dollars

4.5 CSE Billboard

CSE Billboard on March 31, 2011 Total Number of Listed Securities Total number of Companies Total number of Mutual Funds Total Number of Corporate bonds 233 197 33 3

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Total Number of Issued Share, MF Certificates and Corporate 17,135,943,776 Bonds Total number of shares of all listed companies Total number of certificates of all listed MF Total number of listed corporate Bonds 14,607,100,096 2,521,775,000 7,068,680

Total Issued Capital of All Listed Securities Total Issued Capital of All Listed Companies Total issued capital of all MF Total issued capital of all corporate bonds

271,781,979,020 241,401,299,020 23,312,0000,000 7,068,680,000

Total Market Capitalization of All Listed Securities Total market capitalization of all companies Total market capitalization of all MF Total market capitalization of all corporate Bonds

2,268,246,453,286 2,227,807,966,966 33,620,045,000 6,818,441,320

4.6 Most Active Member of CSE

In every quarter the members of CSE change. The members of CSE has to perform well with there organizational performance. The most active member of CSE will be chosen from those criteria. In a survey we found that the most active members in CSE in December, 2010 are-

Rank This Quarter 1 Last Quarter 1

Members Code 91

Member Companies Lanka BanklaSecurities Ltd.

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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

4 2 7 6 8 5 3 9 13 15 20 11 12 10 14 17 16

96 56 76 22 25 38 27 3 33 84 122 19 5 6 63 103 42 53 69

International Securities Co. Ltd. Kabir Securities Ltd. Sohel Securities Ltd. Salta Capital Ltd. Sylhet Metro-City Securities Ltd. SR Capital Ltd. BE Rice limited Meenhar Securities Ltd. Sylnet Securities Ltd. Skys Securities Ltd. Firstlead Securities Ltd. North-West Securities Ltd. Island Securities Ltd. Chittagong Capital Limited Associated Capital Securities Ltd. Mona Financial Consultancy ltd. Remons Investment and Securities Ltd. Royal Capital Ltd. T.K. Shaker & Securities Ltd.

4.7 Sectoral Index of CSE

Sectoral Index of CSE: December, 2010-March, 2011 SL. No (+) 1 2 3 Life Insurance General Insurance Textiles & Clothing 13944.22 1537.63 6583.47 163563.10 20579.77 7806.7 (-) 24318.88 5042.14 1223.23 (+) (-) 14.87 24.50 15.67 Sector 31/03/2011 31/12/2010 Changes Changes (%)

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4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Pharma & Chemicals Foods & Allied Cement Eng. & Electrical Leather & Footwear Services & Property Papers & Printing Energy Mutual Funds Banks Ceramic ICT Leasing and Finance Telecommunication Miscellaneous

18907.58 8240.42 4206.91 8645.18 4605.11 5460.65 2427.28 11326.68 4703.01 58741.37 1034.92 10524.94 46542.42 1047.07 10380.12

20835.94 9537.68 5084.14 11330.69 5374.66 6828.13 2593.85 12934.94 10689.48 88836.20 1412.11 12063.85 59186.60 1486.42 10965.30

1928.36 1297.26 877.23 2685.51 769.55 1367 166.84 1608.26 3286.38 30094.83 377.19 1538.91 12644.18 439.35 585.18

9.25 13.60 17.25 23.70 14.32 20.30 6.42 12.43 30.74 33.88 26.71 12.76 21.36 29.56 5.34

5.1 Conclusion
DSE has three major indices to reflect market behaviour namely DSE all Share Price Index, DSE General Index and DSE-20 Index. DSE reintroduced All Share Price Index (DSI) on 28 March, 2005. The DSI stood at 6877.66 points as against 7135.16 points which is 3.61% lower than of previous month. The Index excludes companies of Z- category and is calculated on the basis of price movement of individuals stocks. The Chittagong Stock Exchange was the first stock exchange in the country to introduce automated trading system on June 1999. The trading system at CSE known as CHITTRA connected major cities of Bangladesh enabling all members to trade - 30 -

nation wide simultaneously with ease and efficiency. CHITTRA provides a screen based quotedriven trading facility. Investors are allowed to quote an expected price in their buy/sell orders. CHITTRA automatically matches the best prices.

5.2 References
1. http://www.cse.com.bd/index2.php?option=content&page=24#eligibility 2. http://www.bangladesh.gov.bd/index.php? option=com_content&task=view&id=89&Itemid=157 3. http://www.dsebd.org/process_of_listing.php 4. Monthly Review of DSE (December, 2010) 5. Monthly Review of CSE (Portfolio: January- March, 2011) 6. http://www.bdstock.com/ 7. http://www.bdstock.com/ipoperformance.php 8. http://www.secbd.org/lawsupdated.html

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