Introduction to DSE

The chamber informed its members and members of its affiliated associations on the
proceedings of the above meeting, requesting them to intimate whether they were
interested in joining the proposed stock exchange. This was followed by meeting at
the chamber of which about 100 persons were interested in the formation of the
exchange on July 7, 1953. The meeting invited 8 gentlemen to become promoters of
the exchange with Mirza Mehdi Ispahani as the convener and authorized them to draw
up the Memorandum and Articles of Association of the Exchange and proceed to
obtain registration under the Company’s Act, 1913. The other 7 promoters of the
exchange were J. M. Addision-Scott, Mohamed Hanif, A. C. Jain, A.K. Khan, Abdul
Jalil, M. Shabbir Ahmed and Sakhawat Hossain.

It was also decided that membership fee was to be RS. 2,000 and subscription at the
rate of RS. 15 per month. The exchange was to consist of not more than 150 members.
A meeting of the promoters was held at the chamber on September 03, 1953 when it
was decided to appoint Orr Dignam & Co. as the solicitor to draw up the
memorandum and articles of association of the stock exchange based on the rules
prevailing in the stock exchanges in other countries and by taking into account the
local conditions.

The 8 promoters incorporated the formation as the East Pakistan Stock Exchange
Association Limited on April 28, 1954. As public limited company the name was
revised to East Pakistan Stock Exchange Ltd on June 23, 1962. Again on May 14,
1964 the name of East Pakistan Stock Exchange Limited was changed to "Dacca
Stock Exchange Ltd."

At the time of incorporation, the authorized capital of the Exchange was RS. 3,00,000
divided into 150 shares of RS. 2,000 each and by an extra ordinary general meeting
held on February 22, 1964 the authorized capital of the exchange was increased to RS.
5,00,000 divided into 250 shares of RS. 2,000 each. The paid up capital of the
exchange stood at RS. 4,60,000 divided into 230 shares of RS. 2,000 each. However,
35 shares out of 230 shares were issued at RS. 80,00,000 only with a face value of RS.
2,000 at a premium of RS. 79,98,000 each.

Although incorporated in 1954, the formal trading started in 1956 at Narayanganj after
obtaining thecertificate of commencement of business. But in 1958 it was shifted to
Dhaka and started functioning at the Narayangonj Chamber Building in Motijheel
C/A.
On October 1, 1957 the Stock Exchange purchased a land measuring 8.75 katha at 9F
Motijheel C/A from the Government and shifted to its own current location in 1959.

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Legal Control

The necessity of establishing a stock exchange in the then East Pakistan was first
recognised by the government when, early in 1952, it was learnt that the Calcutta
Stock Exchange had prohibited transactions of Pakistani shares and securities. The
Provincial Industrial Advisory Council of Pakistan soon set up an organizing
committee for the formation of a stock exchange in East Pakistan. A decisive step was
taken in the second meeting of the organizing committee held on 13thMarch, 1953. In
the cabinet room, Eden Building, under the chairmanship of A. Khaleeli, Secretary of
the Government of East Bengal, Commerce, Labor and Industries Department, various
aspects of the issue were discussed in detail. The central government’s proposal
regarding the opening a branch of Karachi Stock Exchange at Dhaka did not find
favor with the meeting who felt that East Pakistan should have an independent stock
exchange. It was suggested that Dacca Narayanganj Chamber of Commerce &
Industry should approach its members for purchasing the membership cards at RS.
2000 each for the proposed Stock Exchange. It was thought that the location of the
exchange should be either at Dhaka or Narayanganj or Chittagong. An organizing
committee was appointed consisting of leading commercial and industrial
personalities of the province with Mirza Mehdi Ispahani as the convener in order to
organize the exchange.

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Function of DSE

The major functions are:

 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 47).
 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 by laws 1997).
 Investors Protection Fund (As per investor protection fund Regulations 1999).
 Announcement of Price sensitive or other information about listed companies
through online.

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VISION:
To be the leading exchange in the region and a key driver of economic growth with
state-of-art technology and world class service to ensure highest level of confidence
among stakeholders.

MISSION:

 Proactive approach to keep pace with continuous technological advancement,

and providing highest standard of service through efficiency improvement and
introduction of new products.
 Contributing to country's economic growth through creation of wealth,
facilitating access to capital and penetrating untapped market.
 Superior corporate governance to enhance confidence of investors, regulators,
issuers and intermediaries.

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Surveillance at DSE
Market Surveillance ensures orderly market in light of regulatory compliance and
detects manipulative and abuse trading pattern. Surveillance Department of Dhaka
Stock Exchanges (DSE) plays a vital role in ensuring safety and integrity of the
markets. The Department has been set up with a view to keep a proactive oversight on
the surveillance activities of DSE. All the instruments traded in the market come
under the Surveillance umbrella of DSE.

The main objective of the Surveillance function of the Exchange is to promote market
integrity in the following ways:
 By monitoring price and volume movements (volatility) as well as by detecting
potential market abuses at a nascent stage, with a view to minimizing the
ability of the market participants to influence the price of the scrip/scrips in the
absence of any meaningful information.
 By managing default risk by taking necessary actions timely.
Market Abuse is a broad term which includes abnormal price/volume movement,
artificial transactions, false or misleading impressions, insider trading, etc. In order to
detect aberrant behavior/ movement, it is necessary to know the normal market
behavior.
The department carries out investigation, if necessary, based on the preliminary
examination/analysis and suitable actions are taken against members involved based
on the investigation.
Surveillance activities at the Exchange are divided broadly into following two major
segments:

1. Price Monitoring : Price monitoring is mainly related to the price movement/

abnormal fluctuation in prices or volumes etc.
2. Position Monitoring : The position monitoring relates mainly to abnormal
positions of members, Dealers, Institutions and General Investors in order to manage
default risk.
1. Price Monitoring
The functioning of the Price Monitoring is broadly divided into following activities:

Online-Surveillance
One of the most important tools of the Surveillance is the On-line Real Time
Surveillance system with main objectives of detecting potential market abuses at a
nascent stage to reduce the ability of the market participants to unduly influence the
price and volumes of the scrips traded at the Exchange, improve the risk management
system and strengthen the self-regulatory mechanism at the Exchange. The system
provides facility to access trades and orders of members.

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Off-Line-Surveillance
The Off-Line Surveillance system comprises of the various reports based on different
parameters and scrutiny thereof.

2. Position Monitoring
The Surveillance Department closely monitors outstanding exposure of members on a
daily basis. For this purpose, it observes various off-line and on-line market
monitoring reports. The reports are scrutinized to ascertain whether there is excessive
purchase or sale position build up compared to the normal business of the member,
whether there are concentrated purchases or sales, whether the purchases have been
made by inactive or financially weak members and even the quality of scrips is
considered to assess the quality of exposure.

Others
Rumor Verification
 Liaising with Compliance Officers of companies to obtain comments of the
company on various price sensitive corporate news items appearing in selected
News Papers.
 Comments received from the companies are disseminated to the market by way
of online news bulletin.
 Investigations based on rumor verifications are carried out, if required, to
detect cases of suspected insider trading.

Review Media Information

To scrutinize press articles or other media on the daily basis, the news relevant to the
share prices of companies.

Market Intelligence
The rumors floating in the market are verified with the data available with DSE,
Newspapers, Television news channels & Reuters to ascertain the national & global
factors affecting the market sentiments. This enables the Exchange to avert market
problems before it causes a serious damage.

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