About Dhaka Stock Exchange:

Dhaka Stock Exchange Ltd. was established on 1954. It is registered as a Public Limited
Company and its activities are regulated by its Articles of Association rules &
regulations and by-laws along with the Securities and Exchange Ordinance - 1969,
Companies Act - 1994 & Securities & Exchange Commission Act - 1993.
Functions 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 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).

DSE Management:
Until otherwise determined in a shareholders General Meeting of the Exchange with
prior approval of the Commission, number of Directors shall be 13 (thirteen) with the
following composition:
Independent Directors: There shall be 7 (seven) Independent Directors;
Shareholder Directors: There shall be 5 (five) Shareholder Directors from
amongst the Shareholders and Strategic Investor(s); and

 Managing Director: The Managing Director / CEO shall be Ex-Officio member of

the Board with voting right.

Divisions & Departments: At present DSE has 35 departments under 6 different

Divisions. They are
1. HR & Admin. Division
a. Human Resources Department
b. Common Services Department
c. DSE Training Academy
d. Maintenance Admin Department
e. Security Department
f. DSE Tower Project, Nikunja
2. Market Development Division
a. Market Operations Department
b. Product & Market Development Department
c. OTC Market Department
d. Research & Information Department
3. Finance & Accounts Division
a. Clearing Accounts Department
b. General Accounts Department
c. DSE FSDP Department
d. Treasury Management Department
e. Risk Management Department
4. Information & Communication Technology Division
a. Application Support Department
b. Back office Development Department
c. IT Infrastructure Department
d. MIS & Development Department
e. Network Development Department (Local Communication)
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f. Network Development Department (Distance Communication)

g. System & Market Administration Department
h. Web Development Department
i. IT Strategy & Security Department
5. Company Affairs Division
a. Board & Corporate Affairs Department
b. Legal Affairs Department
c. PR & Publication Department
d. TREC Affairs Department
6. Regulatory Affairs Division
a. Surveillance Department
b. Monitoring & Compliance Department
c. Investigation & Enforcement Department
d. Listing Affairs Department
e. Investor Complaints, Arbitration & Litigation Department
Corporate Governance & Financial Reporting Compliance Department
Some Important Terms of DSE:
Share:
Each share represents a small part in the total paid up capital of a company. In fact
a public limited company is one that is formed to accumulate capital from a large
pool of investors. Therefore total capital of such companies is divided into smaller
equal denomination units represented by a share/ capital. One may buy large or
small lots to match the amount of money that one wants to invest.
Market Capitalization:
Market Capitalization is the total market value, at the current stock exchange list
price of the total number of equity shares issued by a company. The amount of

market capitalization as on 11-05-2015 was Tk. 3109961.687 million (3109 billion

approx.). It is calculated as follows:
Market Capitalization = (No. of Issued Share X Close Price)
IPO:
Initial Public offering. IPO means while a company wants to raise fund from the
general public, it goes for public offering after completing necessary regulatory
compliances.
Circuit Filter:
Circuit Filter is the maximum permissible deviation of the price (specified as
percentage), of an aggressor order from the last trade price.
Circuit Breaker:
Circuit Breaker is the maximum permissible deviation of the price (specified as
percentage) of the incoming order from the Circuit Breaker Base Price for that
instrument. Orders violating circuit breaker will result rejection of the order.
Market Lot:
A Market Lot is the smallest tradable unit for an instrument except those traded in
the Odd lot book. All order quantities can only be an integral multiple of the Market
lot.
Odd Lot:
Any number of shares less than the market lot makes an odd lot. Odd lots typically
arise from bonus or rights issues.
Touchline Price:
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The Touchline Price for an instrument is the best offer (sell) and best bid (buy) price
amongst all orders in the order book. The touchline buy price is the highest price
amongst all buy orders and the touchline sell price is the lowest price amongst all
sell orders.
Book Building Method: The process by which an underwriter attempts to
determine at what price to offer an IPO based on demand from institutional
investors, introduced in Dhaka Stock Exchange in February 2010.
How orders are queued for trading?
Orders are queued and traded according to first on price and then time priorities.
Best-priced orders traded first. If there is more than one order at the same price,
the order is placed by time priority.
DSE Indices
The Dhaka Stock Exchange Limited introduced DSE Broad Index (DSEX) and DSE
30 Index (DS30) as per DSE Bangladesh Index Methodology designed and
developed by S&P Dow Jones Indices with effect from January 28, 2013. DSEX is
the Broad Index of the Exchange (Benchmark Index) which reflects around 97% of
the total equity market capitalization.
DS30 constructed with 30 leading companies which can be said as investable Index
of the Exchange. DS30 reflects around 51% of the total equity market
capitalization.
Base Date
The base dates of the DSE 30 Index (DS30) and The DSE Broad Index (DSEX) are
January 17, 2008.
Base Value
DSE 30 Index (DS30): The base value is 1000 for DS30 Index.
The DSE Broad Index (DSEX): The DSE Broad index has a base value of 2951.91 on
Jan 17th 2008 which was the index value of the DSE General Index on this date.

The new index is a broad market index and is designed to reflect the broad market
performance. Starting the base value at 2951.91 the performance of the two
indices has been linked and we maintain the continuity of the performance of the
benchmark. The two indices are very close in design and we can build on the history
of the older index which goes back to 2001.
Index Calculation Algorithm (according to International Organization of Securities
Commissions or IOSCO Index Methodology):

.
Current Index =
.

.
Closing Index =
.

Current M.Cap = (LTP X Total no. of indexed shares)

Closing M.Cap = (CP X Total no. of indexed shares)
Mutual Funds
These funds are usually closed end mutual funds governed by the Securities and
Exchange Commission (Mutual Funds) Rules, 2000 and is backed by one corporate
sponsor and usually is named with the sponsors name. This is an investment
program funded by shareholders that trades in diversified holdings and is
professionally managed

Trading System of DSE

Presently DSE has an Automated Trading System with a capacity to 6 Lac trades per
day. For successful completion of Clearing and Settlement activities DSE has developed
Automated Clearing and Settlement System, which is a Web based integrated
software, it preserves all the information for every listed Company of Dhaka Stock
Exchange which can be accessed for required information.
Markets:
There are four types of market at DSE
1. Public Market: In this market instruments are traded in normal volume.
2. Spot Market: Instruments are traded in normal volumes under corporate action, if
any.
3. Odd lot Market: Odd lots of all Instruments are trade in this market.
4. Block Market: Instruments are traded in bulk volume.
OTC Market:
Over-the-Counter (OTC) means the facilities provided by an exchange for the purpose
of buying or selling of unlisted or delisted securities from the stock exchanges. The
OTC Market provides an alternative to stock exchange listing for securities of issuers
that either choose not to be listed on Dhaka Stock Exchange or not to meet the
relevant listing requirements. The term OTC Securities is a catch all phrases for any
security that is not listed on stock exchange
Instruments categories:
Here is a complete picture of the settlement system for all Instruments categories as
A, B, G, N and Z which are traded in the Four (4) markets of DSE.
A-Category Companies: Companies which are regular in holding the annual general
meetings and have declared dividend at the rate of ten percent or more in the last
English calendar year.

B-Category Companies: Companies which are regular in holding the annual general
meetings but have failed to declare dividend at least at the rate of ten percent in the
last English calendar year.
G-Category Companies: Green-field companies of which shares are listed with the DSE
before the company goes into commercial operation and prior to listing the said
company declares the year of first declaration of dividend.
N-Category Companies: Newly listed companies except green-field companies which
shall be transferred to other categories in accordance with their first dividend
declaration and respective compliance after listing of their shares.
Z-Category Companies: Companies which have failed to hold the annual general
meeting when due or have failed to declare any dividend based on annual
performance or which are not in operation continuously for more than six months or
whose accumulated loss after adjustment of revenue reserve, if any, exceeds its paid
up capital.
DSE Clearing & Settlement System:
The Automated Clearing and Settlement System (CNS) is developed to automate all
post trade activities regarding clearing and settlement. Its main stakeholders are
Brokerage houses, CDBL, Clearing Banks and DSE Finance Division. Major activities of
the system are as below;
Clearing: In clearing process DSE make payment by credit instruction and deliver share
through CDBL clearing schedule to buying broker.
Settlement: In settlement process DSE receives all charges, receivable amount from
selling brokers and earmark selling shares in selling broker clearing account through
CDBL settlement schedule.

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Settlement for different categories instruments

01) For A group Instruments:
Market name

Trade for Trade System

Settlement & Settlement Period

Public

Trade for Trade *

T+1 & T+2

Odd + Block

Trade for Trade

T+1 & T+2

Spot

Trade for Trade

T+0 & T+1

02) For B group Instruments:

Market name

Trade for Trade System

Settlement & Settlement Period

Public

Trade for Trade *

T+1 & T+2

Odd + Block

Trade for Trade

T+1 & T+2

Spot

Trade for Trade

T+0 & T+1

03) For G group Instruments:

Market name

Trade for Trade System

Settlement & Settlement Period

Public

Trade for Trade *

T+1 & T+2

Odd + Block

Trade for Trade

T+1 & T+2

Spot (Before Book-closer) Trade for Trade

T+0 & T+1

04) For N group Instruments:

Market name

Trade for Trade System

Settlement & Settlement Period

Public

Trade for Trade *

T+1 & T+2

Odd + Block

Trade for Trade

T+1 & T+2

Spot (Before Book-closer) Trade for Trade

T+0 & T+1

* As netting system for shares has withdrawn, for A, B, G & N group instrument,
member will have to deposit the full shares at the DSE on T+1 after selling the shares,

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In case of purchasing such shares, the buyer will have to deposit the Balanced
(Netted) money traded in Public, Block & Odd-lot market at the DSE on T+1.
05) For Z group Instruments:
Market name

Trade for Trade System

Settlement & Settlement Period

Public

Trade for Trade *

T+1 & T+9

Odd + Block

Trade for Trade

T+1 & T+9

Spot (Before Book-closer) Trade for Trade

T+0 & T+1

** Under the Trade for trade settlement system, member will have to deposit the full
money at the DSE on T+1 after purchasing the shares, In case of selling such shares,
the seller will have to deposit the full shares at the DSE on T+9.
Demutualization:
Demutualization is the process of converting exchanges from non-profit, memberowned organizations to for profit, investor-owned corporations. More specifically
Demutualization in the context of a stock exchange, means separating ownership
from the right to use the exchanges trading system. For a mutual exchange ownership,
Management and Trading functions are handled by a single group but in a
demutualized exchange these three functions are segregated and managed by
different bodies.
Factors leading to Demutualization:
The following factors are very visibly responsible leading to demutualization.
Rapidly changing marketplace:
With technological developments in information processing and transmission, the
exchange as a physical location has lost its meaning. Access to trading is not
restricted by geographical location and the frontiers between markets and
investors have collapsed.
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Multiple listing of securities in exchanges cutting across national boundaries and

the near round the clock trading offer choice of trade execution to investors, who
can trade in foreign markets as easily as they do in their domestic markets. All these
have fostered competition between securities markets.
Exchanges have to be efficient in order to survive in this environment. They are no
longer organizations to serve the interests of the intermediary; they have to offer
value to investors.
Significantly, exchanges not facing competition have been slow in responding to
changes.
Expansion and technology investment:
Expansion and investment in technology are critical to survive in this environment.
This requires resources of a substantial magnitude. The willingness and ability of
the members to fund expansion and technological upgrade in a mutualized
exchange is rather limited.
Conflict of interest:
A mutualized exchange is subject to conflict of interest. Decisions of the exchange
could affect the trading interests of members, individually or collectively. So their
ability to protect investor interest and enforce rules is viewed with suspicion.
Challenges of Demutualization:
Demutualization is not a legal project, but is a multi-disciplinary issue. As exchanges
demutualize, many challenges come to the fore. The commercial nature of the
exchange, namely profit maximization, may contradict with its role as a public entity
providing a service. The challenges that the demutualized stock exchanges usually face
are as follows
Self-regulation:
A mere conversion from a not-for-profit organizational structure to a for-profit
structure would neither ensure better regulation nor would it instill investor
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confidence. A for-profit enterprise owned and operated by members distributing

the surplus earned is no different from a mutual not-for-profit organization.
Demutualization can be successful only if the interest of investors, issuers and
other stakeholders are of prime concern to shareholders. A demutualized
exchange, focused on profits, may not take its self- regulatory role seriously.
Self-listing:
An entirely new conflict arises if the exchange lists its shares on itself. The exchange
derives advantages by listing its shares.
Governance:
Another concern is whether demutualization and the drive for profits would
compromise the position of stock exchange as a public entity. An appropriate
governing structure balancing the interests of shareholders and the public at large
is a possible remedy. Inclusion of outside Directors on Board to serve as a check
and promote integrity in the decision making of the Board could reduce this risk.
Statutory duties may be imposed on such public directors. A wide ownership may
also create public ownership and check excessive zeal to profit. Regulatory
restrictions on the appointment of senior executives in the exchange may ensure
that right persons are appointed and that they act in public interest, apart from
being responsible to shareholders.

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Sector wise Listed Companies in DSE:

Serial No.

Name of the Industry

Quantity

Bank

30

Cement

Ceramics Sector

Corporate Bond

Debenture

Engineering

30

Financial Institutions

23

Food & Allied

18

Fuel & Power

18

10

Insurance

46

11

IT Sector

12

Jute

13

Miscellaneous

11

14

Mutual Funds

41

15

Paper & Printing

16

Pharmaceuticals & Chemicals

27

17

Services & Real Estate

18

Tannery Industries

19

Telecommunication

20

Textile

40

21

Travel & Leisure

22

Treasury Bond

221

Total Companies:

553

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Number of Industries listed in DSE:

There are 17 different industries in DSE. They are as follows1. Banks
2. Financial Institutions
3. Engineering
4. Food & Allied Products
5. Fuel & Power
6. Jute
7. Textiles
8. Pharmaceuticals & chemicals
9. Paper & Printing
10. Services & Real-estate
11. Cement
12. Information Technology
13. Tannery
14. Ceramic
15. Insurance
16. Telecommunication
17. Travel & leisure

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