Launched in January 2023 as a promising alternative transaction platform for unlisted public companies, the Alternative Trading Board (ATB) on both the Dhaka Stock Exchange (DSE) and Chattogram Stock Exchange (CSE) has languished with only three listed securities over nearly three years. Market analysts and stakeholders attribute this stagnation primarily to a severe lack of promotion and regulatory hurdles.
High Hopes, Low Participation
The ATB was established with the ambitious goal of becoming a popular and cost-effective platform for transferring ownership of shares among promoters and directors of unlisted companies. It aimed to be a major channel for off-market transactions, offering a simplified, “direct listing”-like process. It was also intended to bring better companies to the main market in the long run.
Despite its potential—which includes trading opportunities for:
- Over 3,400 unlisted public limited companies in Bangladesh.
- Companies from the defunct Over the Counter (OTC) market that are still in production.
- Debt securities (corporate bonds, treasury bonds, and debentures).
- Open-ended mutual fund units.
The board has seen minimal uptake. The DSE’s journey began with an attempt to list an unsecured guaranteed bond by Pran Agro Limited, which was later withdrawn by the issuer. Currently, the two stock exchanges collectively have only three securities listed, including two bonds from IFIC Bank on the CSE.
Promotion Gap and Regulatory Roadblocks
Industry insiders are clear on the main obstacle: the stock exchanges’ failure to prioritize and promote the ATB.
Saiful Islam, President of DSE Brokers Association of Bangladesh (DBA), stated, “We have asked the DSE to analyze why the ATB has not expanded. They need to identify whether the issue is a lack of promotion or regulatory complexity.”
Minhaz Mannan Emon, a shareholder director of DSE, conceded that there was a lack of promotion by the exchange. However, he stressed that post-public unrest, main market reforms have taken precedence, suggesting ATB development will be addressed later.
Conversely, M. Saifur Rahman Majumdar, Managing Director of CSE, pointed to existing rules and regulations as a major deterrent. He argued that the current ATB Rules are “not appropriate” for listing tradable securities, limiting listing opportunities and creating an urgent need for legal amendments.
BSEC Task Force to the Rescue
The regulatory body, the Bangladesh Securities and Exchange Commission (BSEC), maintains that promoting the market is the responsibility of the stock exchanges, not the Commission.
Md. Abul Kalam, Director and Spokesperson for BSEC, confirmed that a task force is actively working on reforming the ATB. He stated, “The Commission will take necessary steps in accordance with the recommendations made by our task force, should law changes be required in the interest of the market and investors.”
Al-Amin, a member of the Capital Market Reform Task Force and an Associate Professor at Dhaka University, confirmed that ATB expansion is on their agenda. The task force is currently prioritizing the main market reforms, with ATB and SME market expansion next in line for reform proposals.
ATB’s Undeniable Advantages
Despite the slow start, the ATB offers significant benefits, particularly for unlisted public limited companies:
- Massive Tax Relief: Listing on the ATB significantly reduces the stamp duty tax on share transfers. A BDT 10 face-value share transfer incurs only BDT 0.10 in tax on the ATB, compared to BDT 2.50 for an unlisted company.
- Simplified Transfer: The platform replaces the cumbersome process of physically filling out Form 117 and appearing at the Registrar of Joint Stock Companies (RJSC) for share transfer, enabling a hassle-free digital transaction.
- Capital Raising: Listed companies can still raise capital through Right Shares or Private Placements with BSEC approval.
The ATB’s success hinges on whether the stock exchanges commit to aggressive promotion and if the BSEC-led task force can swiftly implement the necessary rule changes to make the platform a viable and attractive option for the thousands of eligible companies.
