What is Share Market?

The share market is a platform where buyers and sellers come together to trade on publicly listed shares during specific hours of the day. People often use the terms ‘share market’ and ‘stock market’ interchangeably. However, the key difference between the two lies in the fact that while the former is used to trade only shares, the latter allows you to trade various financial securities such as bonds, derivatives, forex etc.

The principal stock exchanges in India are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Types of Share Markets

Stock markets can be further classified into two parts: primary markets and secondary markets.

• Primary Share Markets

  When a company registers itself for the first time at the stock exchange to raise funds through shares, it enters the primary market. This is called an Initial Public Offering (IPO), after which the company becomes publicly registered and its shares can be traded within market participants.

• Secondary Market

  Once a company’s new securities have been sold in the primary market, they are then traded on the secondary stock market. Here, investors get the opportunity to buy and sell the shares among themselves at the prevailing market prices. Typically investors conduct these transactions through a broker or other such intermediary who can facilitate this process.

What Is Traded On The Share Market?

There are four categories of financial instruments that are traded on the stock exchange. These include:

1. Shares

   A share represents a unit of equity ownership in a company. Shareholders are entitled to any profits that the company may earn in the form of dividends. They are also the bearers of any losses that the company may face.

2. Bonds

   To undertake long term and profitable projects, a company requires substantial capital. One way to raise capital is to issue bonds to the public. These bonds represent a “loan” taken by the company. The bondholders become the creditors of the company and receive timely interest payments in the form of coupons. From the perspective of the bondholders, these bonds act as fixed income instruments, where they receive interest on their investment as well as their invested amount at the end of the prescribed period.

3. Mutual Funds

   Mutual funds are professionally managed funds that pool the money of numerous investors and invest the collective capital into various financial securities. You can find mutual funds for a variety of financial instruments like equity, debt, or hybrid funds, to name a few.

   Each mutual fund scheme issues units that are of a certain value similar to a share. When you invest in such funds, you become a unit-holder in that mutual fund scheme. When instruments that are part of that mutual fund scheme earn revenue over time, the unit-holder receives that revenue reflected as the net asset value of the fund or in the form of dividend payouts.

4. Derivatives

   A derivative is a security that derives its value from an underlying security. This can have a wide variety such as shares, bonds, currency, commodities and more! The buyers and sellers of derivatives have opposing expectations of the price of an asset, and hence, enter into a “betting contract” with regards to its future price.

Conclusion

Today, investing in stocks can be considered as one of the best ways to generate long term wealth. With a strategic investment plan, any investor can achieve their long term financial goals with the help of the stock market.

The Bangladesh Securities and Exchange Commission (BSEC) is the regulator of the capital market of Bangladesh, comprising Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE). The commission is a statutory body and attached to the Ministry of Finance. The current chairman of the commission is Shibli Rubayat Ul Islam.

History

BSEC was established on 8 June 1993 under the Securities and Exchange Commission Act, 1993. Before the commission, the market was regulated under the Capital Issues Act 1947. The chairman and members of the commission are appointed by the government and have overall responsibility to administer securities legislation. The commission, at present, has four full-time members, excluding the chairman. The commission is a statutory body and attached to the Ministry of Finance. It works closely with Central Depository Bangladesh Limited. Initially named simply as the Securities and Exchange Commission, on 10 December 2012, its name was officially changed to the Bangladesh Securities and Exchange Commission. During the 2011 Bangladesh share market scam the BSEC withdrew various directives given earlier to help stabilize trading at the Dhaka Stock Exchange and was criticized by some commentators for its actions during the subsequent crash.In 2017, M Khairul Hossain, chairman of Bangladesh Securities and Exchange Commission, announced plans to establish an intelligence unit of the commission.

Bangladesh Academy for Securities Market was established in 2019 as the academic unit of Bangladesh Securities and Exchange Commission with Toufic Ahmad Choudhury as the first Director General.Two professors of the University of Dhaka, Shaikh Shamsuddin Ahmed and Mizanur Rahman, were appointed commissioners of Bangladesh Securities and Exchange Commission on 20 May 2020. In 2021, Bangladesh Securities and Exchange Commission announced it is investigating Padma Bank following a complaint by Mohiuddin Khan Alamgir, founding chairman of the bank, and letter against him from the bank.

Bangladesh Securities and Exchange Commission approved Bashundhara Group's request to purchase a 25 percent stake in the Chittagong Stock Exchange. Under the Digital Security Act, Bangladesh Securities and Exchange Commission was identified as a critical information infrastructure which restricts the publics access to information from the organisation. The commission ordered Tamha Securities to be liquidated to pay back clients whose investment was embezzled by the firm. Professor Rumana Islam of the University of Dhaka was appointed the first female commissioner in May 2022 replacing Khondoker Kamaluzzaman.

Functions

1. Regulating the business of the Stock Exchanges or any other securities markets.
2. Registering and regulating the business of stock-brokers, sub-brokers, share transfer agents, merchant bankers and managers of issues, trustee of trust deeds, registrar of an issue, underwriters, portfolio managers, investment advisers and other intermediaries in the securities market.
3. Registering, monitoring and regulating of collective investment scheme including all forms of mutual funds.
4. Monitoring and regulating all authorized self-regulatory organizations in the securities market.
5. Prohibiting fraudulent and unfair trade practices relating to securities trading in any securities market.
6. Promoting investors’ education and providing training for intermediaries of the securities market.
7. Prohibiting insider trading in securities.
8. Regulating the substantial acquisition of shares and take-over of companies.
9. Undertaking investigation and inspection, inquiries and audit of any issuer or dealer of securities, the Stock Exchanges and intermediaries and any self-regulatory organization in the securities market.
10. Conducting research and publishing information.

The Chittagong Stock Exchange (CSE) began its journey in 10th October of 1995 from Chittagong City through the cry-out trading system with the promise to create a state-of-the art bourse in the country.

Founder members of the proposed Chittagong Stock Exchange approached the Bangladesh Government in January 1995 and obtained the permission of the Securities and Exchange Commission on February 12, 1995 for establishing the country's second stock exchange. The Exchange comprised of twelve Board members, presided by Mr. Amir Khosru Mahmud Chowdhury (MP) and run by an independent secretariat from the very first day of its inception.

CSE was formally opened by then Hon'ble Prime Minister of Bangladesh on November 4, 1995.