The trading of the units of the Investment Corporation of
Bangladesh-run First ICB Mutual Fund continued at the Dhaka and Chittagong
stock exchanges illegally on Wednesday despite that fact that the tenure of the
fund expired on March 31.
As per the mutual fund rules, the stock exchanges delist
a MF after the end of its tenure.
A senior official of Dhaka Stock Exchange told New Age on
Wednesday that the trading of the units of First ICB Mutual Fund continued at
the bourse despite expiry of its tenure on a verbal instruction from the
capital market regulator.
He said that senior officials of the Bangladesh
Securities and Exchange Commission also told them that the tenure of the fund
would be extended by three months with effect from April 1 within this week.
The regulator, however, is yet to issue any directive in
this regard.
A BSEC senior official on Wednesday told New Age that the
commission on Tuesday held a meeting in this regard and found no valid ground
to approve ten-year tenure extension plea made by the ICB for eight mutual
funds it runs.
He said the commission would extend the tenure of First
ICB Mutual Fund by three months from April 1.
As per the mutual fund rules, the tenure of close-ended
mutual funds should not exceed 10 years.
Despite the legal bar, the units of the eight ICB-run
mutual funds have been trading at the DSE for 18-34 years.
The BSEC in November last year, scrapping an ICB plea for
ten-year time extension for the eight mutual funds, asked the state-owned
entity to convert or windup the close-ended MFs within December 2016 one by one
starting from First ICB Mutual Fund, enlisted with the stock exchange in 1980,
within March.
The commission at the same time also warned the ICB for
not complying with earlier regulatory directive that had asked the entity to
convert or windup all eight ICB-run mutual funds within December 2014.
Another BSEC official told New Age that despite ICB’s
repeated violation of securities rules in this regard, the commission refrained
from taking any tough measure against the entity due to the ICB’s strong lobby
with the government’s influential quarter.
The ICB, ignoring the BSEC directive issued in November,
lobbied the finance ministry to press the BSEC for extension of the MFs’
tenures, BSEC officials said.
Following pressure from the finance ministry and some
other influential quarters, the capital market regulator agreed to consider the
ICB’s proposal for tenure extension within legal framework, they said.
After getting BSEC’s green signal, the ICB as per its
board decision on January 22 sought another ten-year tenure for its eight MFs
by handing over the management of the funds to ICB Asset Management Company,
they said.
As the commission found the proposal unlawful, the ICB
filed another proposal to the commission last month.
The proposal said that as per the legal framework, other
firms would be the trustee and custodian of the funds while the ICB would be
the sponsor of the funds and would hold 10 per cent stake in each fund.
Even after the formulation of the mutual fund rules in
2001 that separated functions of sponsor, asset manager, trustee and custodian,
the ICB has been doing all of these jobs violating securities rules.
The BSEC earlier rejected AIMS of Bangladesh’s plea for
extension of tenure of its two mutual funds by 10 years. (Source: New Age,
April 2, 2015)