BSEC seeks World Bank help to upgrade market surveillance system

• BSEC held a meeting with a World Bank delegation 
• Commission also discussed market governance  
• Journalists posed tough questions about access to commission 

The Bangladesh Securities and Exchange Commission (BSEC) has sought assistance from the World Bank to upgrade the surveillance system of the capital market to international standards.

"We are working to upgrade this system as quickly as possible, and for this, we have requested assistance from the World Bank, including technical support," BSEC Commissioner Farzana Lalarukh said after a meeting with a World Bank delegation yesterday.

"Currently, we are operating with a weak surveillance system that was installed in 2012 and has not been updated since," she noted during a press briefing at the commission headquarters.

At the press conference, BSEC Chairman Khondoker Rashed Maqsood faced a barrage of tough questions from reporters, and, at one point, left the venue with many questions unanswered.

"We discussed specific issues today, focusing on which areas we can receive technical assistance from the World Bank. Our primary focus was on improving our surveillance system, particularly how we can enhance our surveillance team. We also discussed governance matters," said Maqsood said after the meeting led by Niraj Verma, practice manager for long-term finance of the World Bank Group.

BSEC Commissioners Md Mohsin Chowdhury, Lalarukh, and Md Ali Akbar also attended the meeting.

How the market surveillance system works

Market surveillance involves preventing and investigating abusive, manipulative, or illegal trading practices in the securities markets. Its main purpose is to ensure that markets operate in an orderly and transparent manner, allowing buyers and sellers to participate with confidence in the fairness and accuracy of transactions. Without effective market surveillance, markets could become chaotic, discouraging investment and hindering economic growth.

In 2012, based on the recommendations of Khandaker Ibrahim Khaled's investigation report on the capital market, the BSEC decided to purchase its surveillance software. The software, named "Instant Watch Market," was acquired from a Swedish company for $350,000, funded by the Asian Development Bank.

Although the software was developed by a Swedish company, the regional vendor was the Indian firm "Chella Software." The contract needs to be renewed every three years, with an annual renewal fee of $50,000 for licensing and maintenance, totalling $150,000 over three years.

This software allows for monitoring both real-time and historical data. However, after purchasing the system from Chella Software, there has been no further contact with them.

The old version of the software is still in use as of today, 31 March. The new version of the software is scheduled to be implemented on 1 April, but the vendor is delaying the provision of the software to the BSEC.

Experts say the surveillance software needs to be updated to enhance integrity and transparency in the market. They also suggested that the department responsible for this should be expanded to ensure effective functioning.

How it works in bourses 

The main objectives of the surveillance function are to promote market integrity by monitoring price and volume movements (volatility). Early detection of potential market abuses reduces the ability of market participants to influence the prices of securities without meaningful information.  

BSEC chairman faced questions from reporters 

After a meeting with the World Bank delegation, the BSEC chairman faced various questions regarding media access at the commission. However, he did not provide clear answers to specific enquiries.

When asked about the Financial Institutions Division's decision to grant three months for the resignation of former BSEC Commissioner ATM Tariquzzaman, and whether he would be left without a position in the coming days, the BSEC chairman stated that some tasks need to be coordinated with the ministry and that there was nothing to comment on publicly regarding this matter.

He also refrained from answering questions about whether the BSEC can operate independently. Citing another meeting, he left quickly after the briefing.