Origin of the report

Our course teacher Rima Pervin authorized us to prepare this report. He authorized us not only orally in our class but also with written documents.

Purpose
This report has been made for an academic requirement of the course Financial Market & Institution. It has made to gain practical knowledge about Capital Market of Bangladesh.

Scope of the study

We, the group members have conducted a survey at Securities and Exchange Commission, which was our given by our course teacher and have collected information which is related to the activities of Securities and Exchange Commission We are benefited to visit the Securities and Exchange Commission. It helps us to increase the knowledge of our subject Financial Market & Institution.

Limitations
During this report we try to learn something about the Organized stock exchange in according the Bangladesh stock market like Dhaka stock exchange and Chittagong stock exchange , and activities of them and we are so happy because we find some source here those are very helpful and co-operative. All of them are helps us tremendously to make this report on basis of facts and complete information. We enjoyed there very much. But there are some limitations too: -

Short of Experience : It was the first opportunity to work in an environment on about Organized stock exchange. Our group members have not any practical idea about this purpose before. Although the lack of our experience this report may be suffer in few areas. Limitation of Times: Generally a long time period is enough to complete the report but, within this time we will try to learning the different activities of organized stock exchange of Dhaka and Chittagong stock market. Lack of Information: When we start to process of our report activities, we face some problems because of our lack of knowledge.

Sources & Methods of Collecting Data

For this report we have collected data from two sources1. Primary Source: We have collected primary data by conducting at Marketile Bank Broker House We have got the answers of the questionnaire by asking questions to and gossiping with the Assistant Manager, whom we surveyed. The questionnaire was built by following the instructions that you gave us to make this report. We, the group members have gathered the information and put our remark at the questionnaire papers. Our opinions are almost alike, that indicates more reliability.

2.

Secondary Source: We gathered some additional information from the website of the SEC.

Stock Exchange
Financial market where securities (bonds, notes, shares) are bought and sold at prices governed by the forces of demand and supply. Stock exchanges basically serve as (1) primary markets where corporations, governments, municipalities, and other incorporated bodies can raise capital by channeling savings of the investors into productive ventures; and (2) secondary markets where investors can sell their securities to other investors for cash, thus reducing the risk of investment and maintaining liquidity in the system. Stock exchanges impose stringent rules, listing requirements, and statutory requirements that are binding on all listed and trading parties. Trades in the older exchanges are conducted on the floor (called the 'trading floor') of the exchange itself, by shouting orders and instructions (called open outcry system). On modern exchanges, trades are conducted over telephone or online. Almost all exchanges are 'auction exchanges' where buyers enter competitive bids and sellers enter competitive orders through a trading day. In Bangladesh there is two organized stock exchange Dhaka Stock Exchange and Chittagong Stock Exchange.

Dhaka stock exchange Definitions of Dhaka Stock Exchange on the Web:

Dhaka Stock Exchange (Generally known as DSE) is the main stock exchange of Bangladesh. It is located in Motijheel at the heart of the Dhaka city. It was incorporated in 1954. Dhaka stock exchange is the first stock exchange of the country.

History:
It first incorporated as East Pakistan Stock Exchange Association Ltd in 28 April 1954 and started formal trading in 1956. It was renamed as East Pakistan Stock Exchange Ltd in 23 June 1962. Again renamed as Dacca Stock Exchange Ltd in 13 May 1964. After the liberation war in 1971 the trading was discontinued for five years. In 1976 trading restarted in Bangladesh. In 16 September 1986 was started. The formula for calculating

DSE all share price index was changed according to IFC in 1 November 1993. The automated trading was initiated in 10 August 1998. In 1 January 2001 was started. Central Depository System was initiated in 24 January 2004. As of November 16, 2009, the benchmark index of the Dhaka Stock Exchange (DSE) crossed 4000 points for the first time, setting another new high at 4148 points.

Chittagong stock exchange Definitions of Chittagong stock exchange on the Web:

Chittagong Stock Exchange is a stock exchange located in the port city of Chittagong in southeastern Bangladesh. It was established in 1995 as the second stock exchange of the country. The exchange is located in the Agrabad commercial area of the city.

History:
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-ofthe 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.

Securities and Exchange Commission

The Securities and Exchange Commission (SEC) was established on 8th June, 1993 under the Securities and Exchange Commission Act, 1993. The Chairman and Members of the Commission are appointed by the government and have overall responsibility to

administer securities legislation. The Commission is a statutory body and attached to the Ministry of Finance.

Member performs the following functions: Serve as the members of the Commission and supervise its management. Provide policy direction to industry and staff and promulgate legally binding rules. Act as an administrative tribunal for decisions on the capital market.

Mission of Securities And Exchange Commission

Protect the interests of securities investors. Develop and maintain fair, transparent and efficient securities markets. Ensure proper issuance of securities and compliance with securities laws.

Principles of Securities And Exchange Commission

1. The responsibilities of the regulator should be clear and objectively stated. 2. The regulator should be operationally independent and accountable in the exercise of its functions and powers. 3. The regulator should have adequate powers, proper resources and the capacity to perform its functions and exercise its powers. 4. The regulator should adopt clear and consistent regulatory processes. 5. The staff of the regulator should observe the highest professional standards, including appropriate standards of confidentiality.

6. The regulatory regime should make appropriate use of Self-Regulatory Organizations (SROs) that exercise some direct oversight responsibility for their respective areas of competence, to the extent appropriate to the size and complexity of the markets. 7. SROs should be subject to the oversight of the regulator and should observe standards of fairness and confidentiality when exercising powers and delegated responsibilities. 8. The regulator should have comprehensive inspection, investigation and surveillance powers. 9. The regulator should have comprehensive enforcement powers.

10. The regulatory system should ensure an effective and credible use of inspection, investigation, surveillance and enforcement powers and implementation of an effective compliance program. 11. . The regulator should have authority to share both public and non-public information with domestic and foreign counterparts. 12. . Regulators should establish information sharing mechanisms that set out when and how they will share both public and non-public information with their domestic and foreign counterparts. 13. The regulatory system should allow for assistance to be provided to foreign regulators who need to make inquiries in the discharge of their functions and exercise of their powers. 14. There should be full, timely and accurate disclosure of financial results and other information that is material to investors' decisions. 15. Holders of securities in a company should be treated in a fair and equitable manner. 16. Accounting and auditing standards should be of a high and internationally acceptable quality. 17. The regulatory system should set standards for the eligibility and the regulation of those who wish to market or operate a collective investment scheme. 18. The regulatory system should provide for rules governing the legal form and structure of collective investment schemes and the segregation and protection of client assets. 19. Regulation should require disclosure, as set forth under the principles for issuers, which is necessary to evaluate the suitability of a collective investment scheme for a particular investor and the value of the investors interest in the scheme. 20. Regulation should ensure that there is a proper and disclosed basis for asset valuation and the pricing and the redemption of units in a collective investment scheme. 21. Regulation should provide for minimum entry standards for market intermediaries.

22. . There should be initial and ongoing capital and other prudential requirements for market intermediaries that reflect the risks that the intermediaries undertake. 23. Market intermediaries should be required to comply with standards for internal organization and operational conduct that aim to protect the interests of clients, ensure proper management of risk, and under which management of the intermediary accepts primary responsibility for these matters.

24. There should be procedures for dealing with the failure of a market intermediary in order to minimize damage and loss to investors and to contain systemic risk. 25. The establishment of trading systems including securities exchanges should be subject to regulatory authorization and oversight.

26. There should be ongoing regulatory supervision of exchanges and trading systems which should aim to ensure that the integrity of trading is maintained through fair and equitable rules that strike an appropriate balance between the demands of different market participants. 27. Regulation should promote transparency of trading. 28. Regulation should be designed to detect and deter manipulation and other unfair trading practices.

29. Regulation should aim to ensure the proper management of large exposures, default risk and market disruption. 30. Systems for clearing and settlement of securities transactions should be subject to regulatory oversight, and designed to ensure that they are fair, effective and efficient and that they reduce systemic risk.

Functions of Securities and Exchange Commission

Regulating the business of the Stock Exchanges or any other securities market. 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.

Registering, monitoring and regulating of collective investment scheme including all forms of mutual funds. Monitoring and regulating all authorized self regulatory organizations in the securities market.

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Prohibiting fraudulent and unfair trade practices relating to securities trading in any securities market. Promoting investors education and providing training for intermediaries of the securities market. Prohibiting insider trading in securities. Regulating the substantial acquisition of shares and take-over of companies.

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. Conducting research and publishing information.

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Recommendation
The main objective of the Surveillance function of the Exchange is to promote market integrity in two ways By monitoring price and volume movements (volatility) as well as by detecting potential market abuses at a nascent stage, with a view to minimizing the ability of the market participants to influence the price of the scrip in the absence of any meaningful information. Market Abuse is a broad term which includes abnormal price/volume movement, artificial transactions, false or misleading impressions, insider trading, etc. In order to detect aberrant behavior/ movement, it is necessary to know the normal market behavior The department carries out investigation, if necessary, based on the preliminary examination/analysis and suitable actions are taken against members involved based on the investigation.

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Conclusion
Organized market is playing a vital role in the whole economy of different ways. Its main function is to collect fund from the market. A stock is a certificate representing partial ownership a corporation. Stock is issued by corporation that is need long-term funds. Stock exchange, organized market for the trading of stocks and bonds, in finance, usually a formal certificate of indebtedness issued in writing by governments or business corporations in return for loans. It bears interest and promises to pay a certain sum of money to the holder after a definite period, usually 10 to 20 years. Dhaka Stock Exchange (DSE) is a public limited company. It is formed and managed under Company Act 1994, Security and Exchange Commission Act 1993, Security and Exchange Commission Regulation 1994, and Security Exchange (Inside Trading) regulation 1994. The issued capital of this company is Tk. 500,000 which is divided up to 250 shares each pricing Tk. 2000. No individual or firm can buy more than one share. According to stock market rule only members can participate in the floor and can buy shares for himself or his clients. At present it has 230 members. Market capitalization of the Dhaka Stock Exchange reached nearly $9 billion in September 2007 and $27.4 billion on Dec 9, 2009. 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-ofthe art bourse in the country. 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.

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In Bangladesh, stock market has some problem. If the limitations can be overcome, we hope it can contribute more in the development of the financial structure of Bangladesh.

References
Website
1. www.dsebd.org 2. www.cse .com.bd 3. www.secbd.org

Book
1. Stocks for the Long Run - Jeremy Siegel. 2. Bangladesh Stock &Capital Market (in Bangla),by Zunial Abedhin. 3. Financial Market & Institution Jeff Madura 8th Edition.

News Paper
1. Daily Star

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2. Daily Prothom Alo

THE END

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