Dhaka Stock Exchange Clearing & Settlement Process

The Clearing and Settlement module provides the management of trade from the point of entry into the Settlement Pool trade database until it has been delivered, settled and removed from the Settlement Pool. It consists of three major business processes.

Clearing: participant trade reporting, affirmation, billing and assigning settlement instructions.

Settlement: the process of overseeing that delivery of all instruments to the buyer and payment of all moneys to the seller has occurred before removing the trade from the settlement pool.

Regulation 4 of the Settlement of Stock Exchange Transactions Regulation 1998 has been given effect time to time. A new directive was made by SEC dated on 18th March 2003 "Adjusted due position mechanism for settlement of scrip only as provided by regulation 4(1) of settlement of Stock Exchange Transaction Regulations, 1998 shall remain suspended from 19th March 2003 until further order".

Here is a complete picture of the settlement system for all of our 427 Instruments in Five (5) groups in the Four (4) markets.

A Group: Number of Instruments are 338 (150 + 8D + 22M + 158TB), Here D for Debentures, M for Mutual funds & TB for Treasury Bonds (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility for scrip only through DSE Clearing House on T+1, T+3 basis). "A" and "DA" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading Software. 

The above cycle is valid for A, B, G & N category instruments traded in Public, Block & Odd-lot market.

B Group: Number of Instruments are 44(Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "B" and "DB" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

G Group: Number of Instrument is 0 (Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "G" and "DG" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

N Group: Number of Instrument is 11(Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "N" and "DN" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

Z Group: Number of Instruments are 34(Trading in Public, Block & Odd-lot Market with trade for trade settlement facility through DSE Clearing House on T+1, T+9 basis). "Z" and "DZ" are marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA Trading software.

 

This cycle is valid only for Z group instruments traded in Public, Block & Odd-lot market.

Instruments Of All Groups Traded In Spot Market:

The above cycle is valid for A, B, G, N & Z category instruments traded in spot market.

 Instruments Of Foreign Trades (DVP) Of All Groups:

The above cycle is valid for A, B, G, N & Z category instruments of Foreign trade.

Remarks:

* If any instrument declared as Compulsory Spot then Trades of Block and Odd-lot market of that Instrument will be settled like Spot Market.

* Howla Charge, Laga Charge & Tax are always payable to Dhaka Stock Exchange at Pay-In date for both Buyer and Seller traded in Public, Block & Odd-lot Market.

* Howla Charge, Laga Charge & Tax are always payable to Dhaka Stock Exchange at T+1 day for both Buyer and Seller traded in Spot Market.

* Outside-Of-Netted settlement for "A" Group instrument has been withdrawn from 10^th Dec 2006.

* DVP Trades are Off-Market Settlement (Broker to Broker).

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+3
Odd + Block	Trade for Trade	T+1 & T+3
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+3
Odd + Block	Trade for Trade	T+1 & T+3
Spot (Before Book-closer)	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+3
Odd + Block	Trade for Trade	T+1 & T+3
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+3
Odd + Block	Trade for Trade	T+1 & T+3
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, 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.

DEMATE SHARE:
All selling shares have to transfer (Pay in) to the clearing account of selling Brokers from concerned BO account within settlement period. Regarding the cash payment the procedure will remain unchanged as mentioned above.

Source : dsebd.org

Function of Dhaka Stock Exchange

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)
» Announcement of Price sensitive or other information about listed companies through online. 

Source : dsebd.org

Legal Control

The Dhaka Stock Exchange (DSE) is registered as a Public Limited Company and its activities are regulated by its Articles of Association rules & regulations and bye-laws along with the Securities and Exchange Ordinance, 1969, Companies Act 1994 & Securities & Exchange Commission Act, 1993.

Source : dsebd.org

Introduction to Dhaka Stock Exchange

The Necessity Of Establishing A Stock Exchange In The Then East Pakistan Was First Decided By The Government When, Early In 1952. It Was Learn That The Calcutta Stock Exchange Had Prohibited The Transactions In Pakistani Shares And Securities. The Provincial Industrial Advisory Council Soon Thereafter Set Up An Organizing Committee For The Formation Of A Stock Exchange In East Pakistan. A Decisive Step Was Taken The Second Meeting Of The Organizing Committee Held On The 13th March ,1953. In The Cabinet Room, Eden Building ,Under The Chairmanship Of Mr.A. Khaleeli, Secretary Government Of East Bengal , Commerce, Labor And Industries Department At Which Various Aspects Of The Issue Were Discussed In Detail. The Then Central Governments Proposal Regarding The Karachi Stock Exchange Opening A Branch At Dhaka. , Did Not Find Favour With The Meeting Who Felt That East Pakistan Should Have An Independent Stock Exchange . It Was Suggested That Dhaka Narayanganj Chamber Of Commerce & Industry Should Approach Its Members For Purchase Of Membership Cards At RS.2000 Each For The Proposed Stock Exchange. The Location Of The Exchange It Was Thought Should Be Either Dhaka Narayanganj Or Chittagong . An Organizing Committee Was Appointed Consisting Of Leading Commercial And Industrial Personalities Of The Province With Mr. Mehdi Ispahani As The Convener In Order To Organize The Exchange.

The Chamber Informed Its Members And Members Of Its Affiliated Associations Of The Proceedings Of The Above Meeting ,Requesting Them To Intimate Whether They Were Interested In Joining The Proposed Stock Exchange. This Was Followed By A Meeting , At The Chamber Of About 100 Persons Interested In The Formation Of The Exchange On 07.07.1953. The Meeting Invited 8 Gentleman To Become Promoters Of The Exchange With Mr. M Mehdi Ispahani As The Convener And Authorized Them To Draw Up The Memorandum And Article Of Association Of The Exchange And Proceed To Obtain Register Under The Companies Act.1913. The Other 7 Promoters Of The Exchange Were Mr. J M Addision-Scott, Mr. Mhodammed Hanif, Mr. A C Jain, Mr. A K Khan , Mr M Shabbir Ahmed And Mr. Sakhawat Hossin.

It Was Also Decided That Membership Fee Was To Be Rs.2000 And Subscription Rate At 15 Per Month. The Exchange Was To Consist Of Not More Than 150 Members. A Meeting Of The Promoters Was Held At The Chamber On 03.09.1953 When It Was Decided To Appoint Orr Dignam & Co., Solicitors To Draw Up The Memorandum And Articles Of Association Of The Stock Exchange Based On The Rules Of Stock Exchange Existing In Other Countries And Taking Into Account Local Conditions.

The 8 Promoters Incorporated The Formation As The East Pakistan Stock Exchange Association Ltd. On 28.04.1954. As Public Company.On 23.06.1962 The Name was Revised To East Pakistan Stock Exchange Ltd. Again On 14.05.1964 The Name Of East Pakistan Stock Exchange Limited Was Changed To "Dhaka Stock Exchange Ltd."

At The Time Of Incorporation The Authorized Capital Of The Exchange Was Rs. 300000 Divided Into 150 Shares. Of Rs. 2000 each and by an extra ordinary general meeting adopted at the extra ordinary general meeting held on 22.02.1964 the authorized capital of the exchange was increased to Tk. 500000 divided into 250 shares of Tk. 2000 each. The paid up capital of the exchange now stoods at Tk.460000 dividend into 230 shares of Tk. 2000 each. However 35 shares out of 230 shares were issued at TK. 80,00,000 only per share of TK. 2000 with a premium of TK. 79,98,000.

Although incorporated in 1954, the formal trading was started in 1956 at Narayanganj after obtaining the certificates of commencement of business. But in 1958 it was shifted to Dhaka and started functioning at the Narayangonj chamber building in Motijheel C/A.

On 1.10.1957 the stock exchange purchase a land measuring 8.75 Kattah at 9F Motijheel C/A from the Government and shifted the stock Exchange to its own location in 1959.

Source : dsebd.org