Dhaka, Bangladesh (BBN)– More than 13,000 beneficiary owner (BO) accounts were closed in the first half (H1) of 2016 as investors quit the stock market following sluggish trend in stock prices.
To trade in the stock market and apply for primary shares, an investor has to open a BO account with the Central Depository Bangladesh Limited (CDBL) through a depository participant, which is usually a stock broker or a merchant bank.
The total number of active BO accounts came down to 3,153,442 on June 30, 2016, which was 3,166,519 on January 1, 2016, according to statistics from the CDBL, which preserves electronic data of all individual and institutional investors.
The annual maintenance fee for each BO account is BDT 500, of which CDBL gets BDT 150, a depository participant BDT 100, Bangladesh Securities and Exchange Commission BDT 50 and the government gets the rest BDT 200.
“Many investors open BO accounts only for applying IPOs and they sell shares in the debut day,” said an analyst at a leading brokerage firm.
“As the number of IPOs is slow in recent time due to a bearish trend in the market and modification in public issue rules by the regulator, the investors reluctant to open new BO accounts rather many of them closed accounts,” he said.
The modification compelled many issuer companies to revise their IPO proposals, and it was a major reason behind the decline in number of IPOs.
Apart from revising the public issue rules, the regulator was following a ‘go-slow’ policy in allowing the IPOs, considering the secondary market that was in a bearish mood.
The number of BO accounts reached highest peak around 3.40 million in March, 2011 as people rushed to open accounts with different brokerage houses lured by the booming share prices, especially from October to early December, 2010.