As a part of our course FIN 335, we collected information about five security firms and tried to find out

the problems of these firms. Our selected five security firms are: 1. Investment Corporation of Bangladesh (ICB) Securities Limited 2. Stock and Bond Limited 3. Mutual Trust Bank Securities Limited 4. Premier Bank Securities Limited 5. Premier Bank Securities Limited

The information about the operation those we collected are described in the following.

1. Investment Corporation of Bangladesh (ICB) Securities Limited:

a. Brokerage Services: Trade Execution Service for both Individual and Institutional Clients in Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited Trade Execution for Non-Resident Bangladeshis in both the bourses Extend Credit Facilities through Margin Accounts Custodial Services provided for clients for Safe Custody of Securities Acts as a Selling Agent under Direct Listing Regulations 2006 and to offload Shares of State Owned Enterprises (SOEs) Trade Execution in the Over-the-Counter Market for its Clients
b. CDBL Services:

BO (Beneficiary Owners) Account opening and maintenance BO ISIN balance enquiry Dematerialization and Re-materialization Pledging, Un-pledging and Confiscation Corporate events announcement enquiry Settlement Transfers & Transfers and Transmission of Securities Other Services as a Full Depository Participant (DP) ICB Securities Trading Company Limited has obtained license from the Securities and Exchange Commission as the Full Service Depository Participant (D. P.) of Central Depository Bangladesh Ltd (CDBL). The company started its function as Depository Participants from 20 November 2003. Till June 30, 2010 a total of 18,207 Beneficiary
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Owners (B. 0.) accounts were opened by institutional and individual clients till June 30, 2008. The year wise position of B.0. accounts is depicted in the following table:

c. Research Services:

Report on Daily Stock Market Customized economic and capital market related research

d. Margin Loan Facility: The company started loan facilities to its clients on selective basis from the last part of 2005-2006. The loan facilities are provided against "A" category shares listed with the bourses. As on 30 June 2010, loan provided to the clients stood at Tk. 105.64 crore and interest earned from the loan during FY 2009-2010 is Tk. 8.69 crore, which was 2.34 crore in the previous year.

2. Stock and Bond Limited:

a. Turnover : Stock and bonds Profit and loss account shows an instances growth in turnover from June 2009 to may 2010. The change in turnover has a percentage change of 77% in positive. That mean in one year the operating growth was positive 77%. It shows that the growth of capital and the growth of stock and bond are positively related. b. Number of clients: In May 2009 stock and bond have approximately 17,000 BO account enlisted, and after one year the BO account stands at approximately 31,000. The percent change in BO account is 82% which is almost equal to the increasing no of BO account of CDBL in one year.

c. Branches in different region of Bangladesh: SBL has total 10 branches among them two brunches are in different divisions of Bangladesh. One is in Khulna and another is in Barishal which gives the access to fulfill the demand of investors in those divisions. These branches have given SBL a competitive advantage getting varies type of clients and make more profit from it.

d. Facility for the loyal clients: Like other big companies SBL gives extra facility to their loyal clients. They give them private trading facility with their own trader. If the clients face any account related problem even financial problem SBL take cares of them
e. New Technology: SBL is trying to introduce technological facility to their clients. SBL is developing software which will notify the clients about the current position of their portfolio. How many securities are matured who much money is idol etc.

f. Most experienced working force: SBL has a reputation to recruit the most experienced personal to do its job done. Dealing with enormous no of client and also dealing with DSE and CDBL need dedication and skills. The brokerage houses are closely monitored by the DSE so it is the employee who has to be strict to maintain rules and regulation if there is one mistake SBL have to pay the price of that mistake. But SBL is maintaining its excellence on its work thats why it is one o the top 10 brokerage house in Bangladesh. g. Giving loan to its client: SBL gives investment loan to its client in really less condition with fewer requirements. Although these loans are not counted in the name of SBL instead Standard Bank Ltd, But the clients have to go for any procedure it tell the CDBL section about the loan amount and it gives the limit and they can buy securities. Although to get this loan the clients has to regularly tread for at least six months.
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3. Mutual Trust Bank Securities Limited:

Mutual Trust Bank Limited as a corporate registered member of Dhaka Stock Exchange as well as a full service depository participant has been rendering its different services of Securities Market Operation like buy/sell of listed securities as per SEC guidelines. Service Offered by Mutual Trust Bank Securities Limited: a. Opening of BO (Beneficiary Owner) Account: Mutual Trust Bank Ltd. (MTB) allows you to open a BO Account to deal with capital market. Its a simple procedure like collecting a prescribed form, fill it up along with two passport size photographs, bank certificate/photocopy of voter ID, organization ID card/photocopy of valid passport and submit to the designated/authorized person of the bank with an amount of BDT 300/as account opening charge. b. Yearly Account Maintenance Fees: Every year it is important to renew the account with a renewal fees of BDT 300/. Otherwise the account will be closed automatically. c. Who can Open BO Account at MTB: Any individual/company who has a bank account can open a BO Account at MTB and deal with share business. One person can open maximum two accounts: a Single Account and a Joint Account. d. Amount of Investment: Account holder can invest any amount available for his/her share business. The amount s/he wants to invest can be deposited in this account and buy sell Shares, Mutual Funds, Debentures and Bond accordingly. e. Margin Facility: MTB allows margin facility as per Margin Rules 1999 to its clients on his/her securities market value or invested amount. f. Dematerialization/Rematerialization of Shares: MTB Brokerage House operates all kinds of share transaction. MTB clients can dematerialize/ rematerialize their shares in the electronic/physical form. This system allows the clients to transact easily and instantly. Clients can find the instant status of the share market including the price.

4. Premier Bank Securities Limited:

Capabilities by Premier Bank Securities Limited: International Standard Brokerage Operation Corporate Member of Dhaka Stock Exchange & Chittagong Stock Exchange
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 Full Service Depository Participant (DP) of Central Depository Bangladesh Limited (CDBL) Highly Skilled Management Advanced IT infrastructure for efficient order processing Exclusive arrangement for keeping safe of all instruments in own vault Regular reporting of portfolio and transaction status through e-mail, fax and website.

Services Provided by Premier Bank Securities Limited: Real Time Online Trading in Bangladesh BO Account Opening Proposed Online Share Trading (market order) Separate Telephone Trading Terminal Trade facilities for Non Resident Bangladeshis Highly Developed Back Office Software Large Multimedia Trading Screen Sophisticated Research and Development Cell Prompt, Reliable and Friendly Client Services Well equipped trading house with sophisticated technologies

Margin & Loan Facilities: Margin Loan will be provided on the basis of client equity and his trade performance under the law and rules of regulatory bodies. The loan can be utilized to purchase securities from the secondary market.

5. EBL Securities Ltd:

EBLSL has come into operation from November 1st of 2010. Eastern Bank Ltd. has acquired stakes in the former LRK securities and has put up an excellent management team to restructure and provide efficient and dedicated service. LRK securities limited previously was one of the most successful privately owned brokerage houses in the country. It came into operation in 1995. It has grown organically in the past 15 years. The company before selling its stakes had a clientele of 17000 investors who are availing our service till date. We have had experience with a rich quality of retail and institutional investors The newly established offices under EBLSL come with the premium standards providing one of the best retail and institutional investor environment. They have implemented the most updated software "BlueChip" that can be maneuvered for all services needed to be provided by a brokerage house. All our equipments come with the latest configurations and a strong server has been installed keeping massive business expansion in mind. The service is entirely automated. For merchant banks, asset management companies and mutual funds, we have dedicated personnel to handle day to day service issues. Services Provided by EBL Securities Limited: Opening and maintenance of BO account Dematerialization and re-materialization of instruments Transfer and transmission of instruments Pledging-unplugging through CDBL Trading Services: EBLSL provides one of the premium trading environments of the country. We are backed up by a strong server ensuring uninterrupted service. Our back-office provides all documents and information to our clients through automated software; so that clients can get portfolio status in a one click away manner. We are privileged by a pool of experienced traders who are well aligned with the market dynamics enabling customers to be informed about certain market movements. Being a full service brokerage, we provide different resources to our clients to make informed decisions. The traders are on a daily basis briefed on the market condition and the clients can avail one-on-one service through our research team to understand portfolio allocation and buy-sell decisions. Margin Facilities: EBLSL provides margin loan facilities at competitive rates financed by Eastern Bank. The margin facilities are generally provided to our clients after 20 working days of initiation of account. Institutional Direct Contact: EBLSL believes in One Call Away service. Institutes are provided with help desks to cater any additional services required. Beyond the assigned trader generally, the institutes are assigned a communication officer to communicate for any requirements.

Tele/E-mail Trading All our clients are provided the opportunity to trade over the phone or E-mail. We understand that our clients are not always able to visit the brokerage houses; therefore we provide hotlines for direct contact with the trader. E-mail follows the same procedure. The trader puts sell-buy on a best effort basis. The trader projects the market momentum and advises the client if required. Daily Portfolio E-mail Service: Everyday your portfolio statement will be mailed to your provided e-mail account taking out the hassle to have to visit the brokerage house for a physical statement. VIP trading Booth We understand the requirement of confidentiality for certain investor and institutes. We provide multiple numbers of glass booths for our VIP clients. Panel Brokerage In case of asset management companies, merchant banks and other funds which require frequent trading we provide TESA panels in the clients location for their trading ease and confidentiality. Female Trading Booth To ensure safe and private trading environment for our female clients, we have allotted a separate female booth. Client Services EBLSL stands for A Call Away service. Just call up our hotline and we will provide you with any assistance that you may require with our best efforts. Our customer care personnel are well equipped to handle all your brokerage service oriented questions.

Problems of Securities Firms in Bangladesh:

1. Cost of opening a new brokerage house: The cost of opening a new brokerage is huge. To become a member of DSE now cost to 500Mn excluding the other cost, Deposit to CDBL is 5 Mn. As our stock market is really inefficient, we are in need of brokerage houses. So despite of the increasing a demand of new brokerage houses it is easy to invest to start one. There is another problem that DSE is not willing to give membership license in near future. Despite of the membership cost it contains a huge portion of money on its setup. So to start a new brokerage one should have to 600Mn 650 Mn which is not easy for a person or company.

2. Lack of the no of branches: According to the demand in some areas, brokers are clearly left behind to provide the service in parts of the country. They cant meet the demand of many areas to build branches.

3. Rules and regulations of DSE: Brokerage houses are always under close monitoring of DSE and SEC. If DSE sees any unusual activity they directly punished the brokerage houses, they dont see who made the mistake is it the trader or client. DSE just fines the house.

4. Rules and Regulation of CDBL: Central Depositor of Bangladesh has its own rules and regulation. Every day brokerage houses have to report to their daily transaction of their clients. Every day after reviewing the transaction a check has to be written and send CDBL as the howla and laga charge. If there is any problem in the number it will straight fine or close the transaction for several days which will conquer a huge loss for the firm and can create tension among the clients.

5. All the brokers dont provide marginal loans: Without the brokers of the banks, only ICB offers marginal loan. But all the other small security firms dont give it. It sometimes decreases chances of investors to invest. 6. Opening a new BO account: To open new BO account a person has to go over few requirements but for a brokerage house its a hustle. Cause if there is any information missed by that particular person the brokerage house has to go for the same procedure again, and the pressure is from both sides. CDBL will charge them that why there is information in the form and client will complain why the firm didnt told them about the mistake in the first place.

7. BO account maintenance: Bo account maintenance is a great responsibility for the brokerage houses. Every financial years end CDBL will charge the houses for the clients account. And after that they have to raise the amount from every individual client. Its a very slow and long process. After collecting the money the firms find that not everyone has paid for there account because some clients. have no
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transaction at all and they will not going to have the renewal amount against that account, Which is ultimately a loss for the brokerage firms.

8. Categorical difference of securities: Every day clients buy sale different category. There are four category in DSE most common A, B, N, and Z category. A and B category share mature in four days and N and Z category matures in 10 working days. Some time clients sell a Z category share and buys an A category share which has a 6 days gap between maturity. So ultimately brokerage houses end up paying for the client and they cant event charge anything as loan or some other criteria. Some time trader prevents the client not to do this but if traders dont pay much attention they end up to this kind of situation.

9. Lack of knowledge among the new investors: Brokerage houses should educate their new clients how to create a healthy portfolio, help them to understand the ups and downs of capital market, but there is no program like that so clients end up with losing their money or take advise from the trader or other clients. Lack of knowledge among the investor is a common problem for the brokerage houses. New investors has no place to learn about market they learn from other investors or they run on it like a wild goose chase and end up with losing money. There is no proper place where they can have the actual idea what is going on the capital market so they are always running behind the rumors. So if investor loss money for some period he withdraws his money from market and firm lose another client. To overcome this situation the trader who places order in computer helps the new investors. But its not sufficient because a trader is a busy person who has to stick there in the keyboard placing order.

10. Overpriced securities: Over pricing of the current securities is done by rumors at times. The market is performing horribly bad for the last one and half years and beside the small investors, brokerage houses are struggling out of the situation.

11. Market manipulation: Market manipulation is a common term in the capital market. There is a group of people who are the big fishes of capital market some time flooded up the market with liquidity raising the prices of securities and then leave with profits and the small investors end up with losing money. Although DSE and SEC are monitoring this kind of situation but practically, many bog players are manipulating in the market. There is always a fear of market manipulations.

12. Lack of experienced manpower: Brokerage houses have a common problem on recruiting employ for their firms. Very few people have chances to learn to work related to brokerage houses. Most the employee doesnt have any knowledge before entering a house. The firms has to recruit a new person then train them by their old employee and make them eligible to work for their client which is a really long and slow process. Again, services provided by related personnel are not prompt.

13.Withdrawal of investments is time killing process: If any investor wants to withdraw his funds of securities, it takes time. This lengthy and complicated process in many cases harasses the investors.

14. All the brokers dont have separate Finance department: SBL does not have an individual finance department. So it is a disadvantage for the company that they cannot monitor their financial activities closely. All the financial decisions are taken by directors like traditional method.

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Reference:
http://www.dsebd.org/ http://www.icb.gov.bd/istcl.php http://mtbsecurities.com/about_profile.php http://www.premierbankltd.com/pbl/brokerage/index.php http://eblsecurities.com/index.php?page=20

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