Stock market stakeholders, seeing only a faint reflection of their continuous input during the year-long regulatory overhauling, became frustrated as soon as the final copies of the new rules were released recently.
The newly enacted margin regulations are already facing legal challenges from investors over alleged over-tightening, which they claim has barred vast numbers of middle-class housewives, students and retired service-holders from taking risks through leverage.
The much-discussed initial public offering (IPO) rules—designed to attract potential ventures and well-performing blue-chip companies to the stock market—topped the list of frustrations when a wide range of stakeholders, during a consultation session on the published draft, criticised the overnight changes made at the eleventh hour.
“We are going to miss another big chance to overhaul the regulatory regime for a vibrant capital market,” Dhaka Stock Exchange (DSE) Director Richard D’Rozario said at the event organised at the DSE Tower in the capital.
“Each of the key stakeholders suggested a lot of things for the stock market reforms, and most of those were not reflected,” he said, expressing concern that stock market regulations might remain unusually complex in Bangladesh, deterring both demand and supply sides.
For instance, the draft IPO rules completely prohibited firms from using IPO funds as working capital or for loan repayments, even though greater flexibility has historically failed to attract established firms to go public in Bangladesh.
Quoting written feedback from a foreign investor, DSE Brokers’ Association President Saiful Islam said the proposed regulations are extremely complex, while Bangladesh should simply learn from regional peers such as Vietnam, which has succeeded in building a vibrant and liquid capital market.
Bangladesh’s stock market did not suffer from lax regulations; rather, political interference—in the form of obstructing the right course of action or granting waivers to favoured groups—has weakened it, said D’Rozario.
According to him, the previous margin rules would have been sufficient to prevent the current crisis of billions in negative equity in the intermediary industry.
However, during the 2010 downturn, the government and the regulator did not allow stockbrokers to dispose of toxic assets by verbally prohibiting forced selling.
DBA leaders Md Moniruzzaman and Md Nafeez Al Tarik, in a presentation, criticised the regulatory mindset of trying to prevent IPO investors’ losses through ever-tighter regulations.
Excessive tightening on pre-IPO shareholders—by extending their effective mandatory holding period to 5–6 years—setting IPO prices using overly conservative benchmarks that blur the difference between growing firms and saturated businesses, and a lack of faith in institutional investors in the price-discovery process were all reflected in the draft rules, which they argued would neither create new investors nor increase the supply of quality scrips.
Representatives from the pharmaceutical industry said that while the sector has several firms ready for IPOs, they need the regulations to be more business-friendly.
DSE Independent Director major general (retd) Mohammad Quamruzzaman, echoing most speakers, said the capital market has been burdened with too many rules containing excessively stringent provisions, but suffers from poor implementation and weak oversight.
The stock market, after the July uprising last year, rebounded sharply twice, but neither rally lasted. The first rebound came with the sense of freedom following Hasina’s exit, which continued until the interim government and the regulatory board took charge in August 2025. The second occurred between June and September, driven by a sharp reversal in treasury bill and bond interest rates.
However, what should have been a natural phase of profit-booking and market correction turned uncontrolled, wiping out the entire gains by last week as investors rushed to sell amid a fresh wave of regulatory adversities.
The BSEC, under the chairmanship of former banker Khondoker Rashed Maqsood, formed a task force a year ago that consulted smaller focus groups of stakeholders for reform recommendations.
TIMES of Bangladesh spoke to many of them on Wednesday, and they complained that most of their recommendations were ignored and that the proposals were drastically altered before finalisation.
Meanwhile, the total number of BO accounts dropped to 16.17 lakh on 18 November from 16.79 lakh a year earlier, while the number of active accounts—those holding shares—fell to 12.06 lakh from 12.79 lakh over the same period.
The DSEX had surged from the 5,200 level in early August but is now struggling below the 5,000 mark, despite easing inflation and interest rates, which should have created room for listed companies to sell more and earn more.
“We cannot afford to miss the chance to align the regulations with what the economy needs,” DBA President Saiful Islam told TIMES of Bangladesh.
The finalisation of each rule must be well thought out, he stressed.
