BSEC seeks DSE explanation on Monarch Holdings licence renewal

The Bangladesh Securities and Exchange Commission (BSEC) has sought an explanation from the Dhaka Stock Exchange (DSE) over its handling of stockbroker and dealer Monarch Holdings Limited's licence renewal, saying the bourse failed to follow regulatory rules.

In a press statement issued today, the regulator said the DSE initially issued a positive recommendation to renew Monarch Holdings' stockbroker and dealer registration certificates without properly following the Securities and Exchange Commission (Stock-Dealer, Stock-Broker and Authorised Representative) Rules, 2000.

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The BSEC said issuing a favourable recommendation without completing the required regulatory review constitutes a clear breach of rules and reflects a failure by the country's premier bourse to perform its regulatory duty.

Although the DSE later submitted the required documents, it stopped short of offering any specific recommendation — for or against — the renewal.

The commission has decided to formally demand an explanation from the DSE for failing to provide a clear regulatory recommendation in line with the rules, it said after a meeting chaired by BSEC Chairman Masud Khan.

The BSEC has instructed the DSE to submit a specific recommendation on the renewal, along with the necessary information, analysis and regulatory evaluation, within five working days of receiving its letter.

The regulator has previously fined Monarch Holdings Managing Director Kazi Sadia Hasan on several occasions over her involvement, along with her spouse Abul Khayer Hiru, in share price manipulation.

A DSE official, speaking on condition of anonymity, said brokerage firms are required to fulfil a form with information about directors of the firm if they were fined by the stock market regulator for market manipulation.

Monarch Holdings did not make that disclosure, even though its directors had been fined, the official also said.

“Despite that, the DSE recommended positive or licence renewal. The new management did not give the recommendation,” he added.