Overview

Depository Bangladesh Limited (CDBL) was incorporated on 20 th August 2000 sponsored by the country's Nationalized Commercial Banks (NCBs), Investment Corporation of Bangladesh (ICB), Private Commercial Banks (PCBs), Foreign Banks, Merchant Banks, Publicly listed Companies, Insurance Companies and Dhaka & Chittagong Stock Exchanges with the collaboration of the Asian Development Bank (ADB). Legal basis for CDBL's operations is set out in the Depositories Act 1999, Depositories Regulations 2000, Depository (User) Regulations 2003, and the CDBL by-laws. CDBL's core services cover the efficient delivery, settlement and transfer of securities through computerized book entry system i.e. recording and maintaining securities accounts and registering transfer of securities; changing the ownership without any physical movement or endorsement of certificates and execution of transfer instruments. The Central Depository System (CDS) operated by CDBL has proved to be a convenient and reliable means to settle securities transaction. The investor has been freed from the hassles of physical handling of certificates, errors in paper work and the risks associated with damaged, lost and forged certificates. CDBL's operations are carried out in its Main Data Centre which is linked to a remote Disaster Recovery Centre operating as a backup with data update taking place simultaneously. Network connectivity to Depository Participants, Issuers, Banks, Stock Exchanges and Bangladesh Bank is through Front End interfaces accessed by WAN link and dial-up telephone lines. Live operations of the CDS commenced with the inauguration of the Electronic Government Securities Registry (EGSR) by the Governor of Bangladesh Bank on 20 th October 2003. The EGSR also serves as a platform for secondary market sale/purchase as well as Repo transactions of government securities to commercial banks linked online to the CDS. Equity market securities dematerialization process i.e. eliminating physical certificate as record of security ownership by substituting it as an electronic book entry record in the CDS commenced on 24 th January 2004 with the entry of Square Pharmaceuticals Limited into the CDS. Since 14th February 2003 CDBL has been acting as National Numbering Agency for International Securities Identification Number (ISIN) as partner in Bangladesh of Association of National Numbering Agencies (ANNA) based in Germany. CDBL is a member of Asia Pacific CSD Group (ACG) and an associate member of South Asian Federation of Exchanges (SAFE).

Method of Operation

1. The investor opens a depository account with a participant or CDBL. 2. Certificates are dematerialised' by lodging them at the issuer. 3. The issuer updates the register and moves the holding to the depository portion of the register. 4. The investor sells on a stock exchange through a stock broker and another investor buys. 5. The stock exchange advises CDBL to update its records. 6. CDBL debits the sellers account. 7. CDBL credits the buyers account. 8. Investors may rematerialise if they wish.

What Are Open-End Mutual Funds?

When most people think of a mutual fund, what they are thinking of is an open-end mutual fund. This type of mutual fund does not have restrictions on the amount of shares that the fund can issue to current and new investors. Therefore, if demand for shares of an open-end mutual fund increases, the mutual fund and the company that runs it will continue to issue new shares no matter how many investors there are. Open-end mutual funds can also buy back shares of the fund when investors wish to sell. The mutual fund itself is the market maker and ensures that there are buyers and sellers when that function is needed. It is valued based on net asset value, or NAV, which is the total market value of its underlying assets. As a result of these characteristics, open-end mutual funds allow investors a lot of flexibility

What Are Closed-End Mutual Funds?

Whereas an open-end mutual fund is constantly adding and subtracting to its total shares outstanding, a closed-end mutual fund does not engage in the traditional adding and subtracting of additional shares. Instead, a closed-end mutual fund trades through a stock exchange such as the New York Stock Exchange (NYSE) and has a fixed number of shares that are available to the market. For example, if one million shares are issued during an initial public offering (IPO) of a fund, then that amount will be the set amount to be traded back and forth through intermediarie.

Open-end Funds vs. Closed-end Funds

Open-end funds are those funds in which the company can always issue more shares outstanding. This, in effect, adds to the net assets of the company.

A closed-end fund (or publicly traded mutual fund) is one that is bought and sold just like the shares of a regular stock. The number of shares in a closed-end mutual fund stays fixed. This is the way in which it differs drastically from an open-end fund. Closed-end funds also have a commission which gets paid to brokers because the shares of these funds are traded over-thecounter, or in the same way that stocks are. One note of caution about closed-end stock funds: If you buy a stock fund when it is first offered for sale, you will undoubtedly take a hit. Because the fund's shares are offered at their actual value, they start trading at a discount almost immediately. So the best thing to do is to stay away from closed-end stock funds. Closed-end funds don't really retreat that much during a downturn in the market, but they are preferable for the long-term investor. If you're the type of investor who buys and sells shares rapidly, then you would lose a lot of money in the commissions of closed-end funds.
Closed-end Funds vs. Open-end Funds Type How Shares are Bought Sales Price Market price Shares Outstanding Fixed

Closed-end Stock Exchange Open-end Directly through fund

Net asset value Varies

Key difference:

1. Whenever an investor buys shares of open-ended funds the funds asset rise as money is added (equal to the price of shares) to the asset pool, and whenever an investor liquidates shares the funds asset decline as money is taken from the pool of assets. But in closed end funds as buying and selling activities not directly affect funds asset.

2. The value of open-ended funds is equal to their Net Asset Value (NAV). But value of closed-ended funds can deviate from NAV. Positive deviation is named as premium and negative deviation as discount. 3. The expense ratio of open-ended funds is often higher than closed-ended funds. This is because CEFs do not have to deal with regular creation and redemption of shares. 4. As closed ended funds are traded on exchanges, they are bound to obey some rules which make them more transparent to investors, especially to its shareholders. 5. Because of their low expense ratio, CEFs are allowed to invest more in illiquid securities than OEFs. 6. For creating and redeeming shares, open-ended funds are forced to keep some part of their asset as money, where as closed-ended funds can invest all (most) of their asset to build a portfolio of stocks or other securities. 7. In periods of market panic, for rising money in hand, open-ended fund managers can be forced to sell some asset of their portfolio which they want to hold and this can harm the liquidity and balance of the fund. This is not a problem with closed-ended funds as buying and selling activities are between market participants (investors, brokers and market makers) and the fund is not directly involved in it.

Private placement
Private placement (or non-public offering) is a funding round of securities which are sold without an initial public offering, usually to a small number of chosen private investors.[1] In the United States, although these placements are subject to the Securities Act of 1933, the securities offered do not have to be registered with the Securities and Exchange Commission if the issuance of the securities conforms to an exemption from registrations as set forth in the Securities Act of 1933 and SEC rules promulgated thereunder. Most private placements are offered under the Rules known as Regulation D. Private placements may typically consist of stocks, shares of common stock or preferred stock or other forms of membership interests, warrants or promissory notes (including convertible promissory notes), bonds, and purchasers are often institutional investors such as banks, insurance companies or pension funds.

Private placement means direct sale of securities to a small number of investors. These investors are financial institutions , Banks and HNI. This method is very popular because it saves time and

cost. In India ,this method was not bound by any regulatory measure until 2003. In September 2003,SEBI took the charge and implemented new rules in this regard.These are not listed in stock exchange hence secondary market do not exist for such securities