Mohammad Mufazzal

The securities regulator's delayed and 'impractical' stance regarding the proposed bonus issue have helped some quarters to play with the market prices of mutual funds, experts said.

Their observation comes after the prices of mutual funds recently have observed rally several times and touched the circuit breaker following the rumours that the regulator is going to disclose final decision on the issuance of bonus by mutual funds.

On January 3 the transaction of mutual funds rose by around 17 per cent than that of previous session.

On October 13, 2012 the Bangladesh Securities and Exchange Commission (BSEC) sought public opinion on the proposed amendment to the rules of mutual funds including a provision of disbursing bonus units.

Then the regulator was criticised for delaying its disclosure on the decision of commission meeting, as a quarter was benefited by purchasing the units of mutual funds with prior information.

But after the formal disclosure the prices of mutual funds went down significantly, as some people offloaded the units purchased earlier in line with the decision of the regulator.

The former finance adviser to caretaker government AB Mirza Azizul Islam said the regulator's long awaited stance over the proposed bonus issue is "nor fair".

"It is absolutely unfair if the regulator prolongs the decision, which may influence the securities' prices as price sensitive information," said Mr. Islam, also an ex-SEC chairman.

While speaking about the delayed disclosure on the decision of proposed bonus issue taken at the commission meeting, the former BSEC Chairman said, "The regulator should be prompt and transparent."

Another former BSEC Chairman Faruq Ahmad Siddiqi recently told the FE that the mutual fund sector will be speculative in future due to the provision of issuing bonus units.

The market expert and fund manager Yaweer Syeed said the regulator clear its position as early as possible.

"If the responsible authority fails to protect its dignity then the quarters will reap its benefit," said Yaweer Syeed, also the managing director of AIMS of Bangladesh.

He said some people are being able to influence the securities' prices, as the regulator is yet to clear its stance regarding the proposed bonus issue for mutual funds.

"I do not know what is going to be decided by the regulator. But a quarter is taking the benefit of the silence by the regulator," Syeed added.