Dhaka, Bangladesh (BBN)– The BSEC has approved the draft rules of Exchange Traded Fund (ETF) with a view to introduce such new product as ‘Collective Investment Scheme’ in the country’s stock market.
The approval to draft rules of the ETF came at a meeting of the Bangladesh Securities and Exchange Commission (BSEC) held at its office in the capital Dhaka on Thursday.
An ETF is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange.
As per the draft rules approved by the BSEC, the ETF will be formed through distribution of private placements to eligible investors.
As per the securities regulator’s draft rules, the ETF will be listed with the bourses under the Collective Investment Scheme, despite the fund will be formed as open-end one.
The minimum size of the ETF will be BDT 500 million, but the size of the fund may be changed through ‘creation’ and ‘redemption’ by the authorized participants.
The stock brokers and dealers will play the role of market makers in case of the ETF. The regulator will seek public opinion on the draft rules of the ETF soon.
At Thursday’s meeting, the securities regulator has also approved, among others, the draft prospectus of UFS Padma Life Islamic Unit Fund.
According to BSEC approval, the initial size of the UFS Padma Life Islamic Unit Fund will be BDT 500 million.
Of BDT 500 million, the sponsor will contribute BDT 50 million and remaining BDT 450 million will be collected by selling units.
Universal Financial Solutions is the fund manager of UFS Padma Life Islamic Unit Fund. And Investment Corporation of Bangladesh will play the role of custodian and trustee of the fund respectively.
At Thursday’s meeting, the securities regulator formed a five-member body to monitor the overall activities of the Central Depository Bangladesh Limited (CDBL). The BSEC body will inspect the CDBL regularly in every month.
The securities regulator has also approved the unit holders’ proposal in converting 6th ICB Mutual Fund into open-end fund.
The regulator Thursday also fined managing directors and the directors, other than independent and nominated ones, of some companies for their failure in submitting quarterly and audited financial statements timely.
As per the BSEC decision, the managing directors and the directors of those companies will have to pay BDT 0.1 million each as penalty for breaching the securities rules.
The companies which failed to submit financial statements are: Meghna Shrimp Culture, Tulip Dairy and Food Products, Chic Tex, Bangladesh Electricity Meter Company, Raspit Data Management and Telecommunications, Rose Heaven Ball Pen Industries, Raspit (Inc) Bangladesh, Mita Textiles and Metalex Corporation.