Safeguard Policy Statement & Strategy 2020 Midterm Review
Bangladesh:
Supporting Capital Market Reforms
Third Capital Market Development Program
Development
impact:
Sector:
Drivers of Change:
Project Term:
ADB Financing:
Enhanced capacity and size of
the capital market in a strong
legal and regulatory framework
Finance - Money and capital
markets
Governance and capacity
development
Knowledge solutions
Partnerships
Private sector development
2015 2018
$400 million
DHAKA STOCK EXCHANGE LTD
PROJECT SUMMARY:
The program will help Bangladesh continue capital market reforms
which should boost private investment and support the country's
drive to achieve middle-income status by 2021.
The third program will strengthen the Bangladesh Securities and
Exchange Commission and support the establishment of a clearing
and settlement company. It will also support new areas such as
strengthening the Insurance Development and Regulatory Authority
to promote the insurance industry's growth and stability, and
encourage insurers to use the capital markets more.
To improve enforcement and to boost accounting and auditing
standards, a special tribunal for capital market-related cases will be
put into operation and a financial reporting council with an
independent audit oversight function will be established, resulting in
the adoption of international accounting standards which will
enhance market confidence and encourage investment.
To increase the supply of high quality bonds and other market
instruments, policy actions will be taken to remove the 60:40 debt-to-
equity ratio ceiling that companies must adhere to, to cut the initial
public offering lock-in period for private equity investors, and to draw
up rules to promote Islamic finance, including sukuk.
The program will also spur a more liquid bond market with pilot sales
of floating-rate government bonds and by allowing primary dealers to
short sell government securities. Meanwhile, rule changes on taxes
and exchange-traded funds will seek to promote a more robust
mutual fund industry.
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