Market Profiles

FII Market Entry Requirements for Bangladesh

RBC IS operates a segregated account structure in this market.

Please refer to 'Market Account Opening Requirements' for information on the market requirements. Clients are requested to refer to the requirements for information purposes only.

For further information or support around accessing this market, please contact your RBC IS representative.

Client Notice

Please note not all financial instruments and exchanges listed below are available as an RBCIS product offering. Please consult our Terms & Conditions or reach out to your RBCIS representative for further details.

Dhaka Stock Exchange (DSE) - incorporated in 1954 although formal trading did not commence until 1956. The DSE is responsible for the listing of companies and monitoring their activities; market administration and control; market surveillance; settlement of trading; and the Investors Protection Fund. Almost all securities listed on the CSE are also listed on the DSE, however the majority of foreign investors trade on the DSE.

The Chittagong Stock Exchange (CSE) - The CSE opened with a manual trading system in 1985, launching fully automated screen-based trading in 1998. The CSE is limited by guarantee having share capital and is a non-profit organisation. It has a policy making body of 18 members who have administrative powers to admit/expel members; admit listing/delisting of securities; control the exchange; make, amend and suspend operation of the rules, by-laws and regulations of the exchange.

Note: trading hours may be amended during the holy month of Ramadan.

ISIN (International Securities Identification Numbering): Yes

Other: Local codes used for trading in the exchanges.

Bangladesh Bank: the central bank of the country oversees regulations for cash account transfers and FX. The main objectives are to regulate the issuance of currency and the keeping of reserves; manage the monetary and credit system of the market; preserve the par value of the Taka; and to promote and maintain a high level of production, employment and real income in Bangladesh.

Bangladesh Securities and Exchange Commission (BSEC): controls and oversees the development of the securities market, protects the interest of investors and regulates stock exchange activities and any other stock market business.

Market is fully dematerialized. Physical securities are no longer traded in the exchange.

Both the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) implement a circuit breaker mechanism whereby trading will be halted until further notice from the SEC, based on previous day’s closing price.

Standard downward price change limit of 3% is applied for all securities other than the securities in floor price. There is no change in upward price change limit.

The updated price change limit for each securities, other than the 6 securities with trade code (1) BEXIMCO (2) BSRMLTD (3) ISLAMIBANK (4) KPCL (5) MPETROLEUM (6) SPCL, will be as below:

For newly listed security, the standard circuit breaker will apply from the first trading day.

Equities:

BDT

Not available for foreign investors for equities and corporate bonds.

Book-Entry: Transfers of depository eligible securities are through electronic book-entry only.

1) T+2 daily gross rolling settlement cycle for "A" "B" "G" and "N" group shares:most commonly used settlement method in the exchange of Bangladesh. Often used by brokers to execute trades for their foreign clients in this segment. Brokers must submit their gross position of scripless shares and net position of cash (by cheque) to the clearinghouse on T+1. Selling broker for local investors deliver sold shares to exchange on T+0. Cash cheque clearing takes place through a trading account of exchanges with a local bank on T+1. Final settlement between brokers and the clearinghouse is completed on T+2.

(2) T+3 daily gross rolling settlement for “Z” group shares: available for all types of investors, foreign or local. Unlike above (1), the pay-in date is on T+1 and pay-out date is on T+9. All other processing is same as that of T+2 settlement cycle. "Z" group shares have a longer settlement cycle.

(3) T+5 transactions for foreign investors: designed to facilitate trade settlements of foreign investors to accommodate and delay in sending their instructions to the local brokers and custodian banks due to differences in geographic time zones and weekly holidays. The clearing house of the Exchange functions as a 'clearing post' and settlement takes place directly between the brokers by T+5 against payment by cash, cashier's order/payment order or demand draft.

(4) T+0 Spot transaction: designed to facilitate transaction of stocks that have declared a book closure date, odd lot trading. Clearing houses of DSE/CSE functions as clearing post and settlement takes place directly between the brokers.

N/A

Same day turnaround trades are allowed in Bangladesh, but they are not common. Normally securities must be received by 15:00 on SD to complete the turnaround delivery.

Dhaka Stock Exchange (DSE)

Chittagong Stock Exchange (CSE)

The Central Depository Bangladesh Limited (CDBL), is regulated by the SEC and a private sector led company sponsored by Asian Development Bank, Chittagong Stock Exchange, Dhaka Stock Exchange, Investment Corporation of Bangladesh, four government owned commercial banks, foreign banks, private banks, insurance companies and other listed and non-listed companies.

The CDBL is the only depository authorised to provide safekeeping and settlement services for equities, corporate bonds. CDBL has started to offer settlement services for treasury bonds as well from October 2022. It commenced operations for equity securities on January 24, 2004. All shares that are currently being traded in the exchanges are in dematerialised form.

Central Bank System for holding government securities or Market Infrastructure System (MI System), is used by central bank for holding Government Securities. Foreign investors are allowed to purchase only Bangladesh Government Treasury Bond (BGTB) with maturity of 2,5,10,15 & 20 years.

For BGTB, investors can use existing CDBL account or they can open directly at Central Bank system via their sub-custodian and purchase BGTB from sub-custodian or third party banks.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

Not currently applicable to this market.

The markets do not involve any international settlement and they are all local settlements. Locally there is no true DVP settlement. However subcustodians follow Physical DVP Settlement method for cash and securities with the counterparty brokers who maintain their cash accounts with them. The main payment method in the country is via cheque / or cash. Subcustodians may also settle cash with the counterparty brokers by directly debiting/crediting their account.

Book-Entry: the transfer of dematerialised securities is through electronic book entry. Transfer of ownership is immediate upon transfer. Dematerialised shares do not require any registration.

Issuing company.

Re-registration is not required for scripless shares.

Share holdings may be required to be disclosed by the beneficial owner, particularly when holdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue we encourage you to consult your legal counsel. 

Failure to comply with reporting requirements may lead to penalties and/or other sanctions.

Issuing companies are required to report to the BSEC by the seventh day of every month if an entity holds 10% or more of their share capital. Companies report shareholder information to the Registrar of Joint Stock Companies annually, within 21 days of the annual general meeting (AGM).

Prior to exceeding 10% holding in any issue, an investor is required to make a newspaper announcement in a format specified by the SEC. The accouchement needs to be made through a registered merchant bank of the Securities & Exchange Commission. Subcustodians can help to establish contact with a merchant bank by the client. This does not apply to pre-IPO placements, IPO subscriptions, inheritance of shares, mutual fund entities as approved by the SEC.

The exchange automatically executes a buy-in on T+2, without advising the defaulting broker for trades cleared through exchanges (i.e. T+2 and T+9). T+5 and T+0 for direct settlement between brokers are not subject to any buy-in.

Not applicable in Bangladesh

There is "Settlement Guarantee Fund" for trading brokers.

There are anti-money laundering regulations/guidelines from central bank for organisations in securities industry which include custodian banks.

This is an FII market. Please contact your RBC Investor Services' Client Manager before making portfolio investments.

Clients must open a "Non-resident Investors Taka Account" with a bank in Bangladeshwhich is recognised by the BSEC for providing custodial banking services to foreign investors.

Individual ownership, irrespective of foreign or local, of banks is restricted to 10% of the issued capital. Investment can be made in banking companies without any prior approval until 5% holding limit is reached and with central bank approval maximum investment limit in banking companies is up to 10%.

An investor is required to obtain prior approval before acquiring 5% shareholding in a Banking Company directly or indirectly, singly or jointly. 

Foreign investors are permitted to invest in equities, corporate bonds and 2, 5, 10, 15 & 20 years of BGTB. Treasury bills cannot be purchased by Foreign Investors. 

Foreign institutional investment in Initial Public Offerings and rights is unlimited.

Foreign investors must open a Non-Resident Investors Taka Account (NITA) to facilitate securities settlements and foreign exchange transactions. The NITA is non-interest bearing by regulation and overdrafts are not allowed. While no pre-approvals are required to process inward remittances or requests for repatriation, the local custodian must report all outward and inward remittances from the NITA on a monthly basis to Bangladesh Bank (central bank of Bangladesh).

Capital and income can be repatriated freely.

According to central bank only securities related transactions can be done through NITAaccount. Investors can convert foreign currency into Taka through the local market. Investors are permitted to convert sales proceeds and corporate action income into foreign currency and repatriate such funds after taxes have been paid, without further approval.

The exchanges mainly use Electronic Fund transfer platforms like RTGS and BEFTN. There is use of physical instruments as well by the participants.

No, overdrafts are not permitted in Non-resident Investors Taka Account (NITA).

Upon decision by any company's board members to offer dividend or stock dividend or any other price sensitive information the respective companies are required to fax the resolution to the stock exchange on the same day of decision taken along with a newspaper publication on the following day.

Usually annually, within 30 days of the annual general meeting (AGM)

Usually semi-annually

Calendar year

No separate ISIN is issued for rights shares. Adequate funding instruction needs to be given to subcustodian at least three working days prior to subscription closing date.

N/A

No restrictions

No

Provided in English. AGM's and extraordinary general meetings are announced 14 to 21 days in advance.

On request, subject to availability

On request, subject to availability

Not required per securities account.

Not applicable

Income from dividends for Foreign Institutional Investors (FIIs) is subject to a 20% withholding tax.

30% at source for dividends earned by any non-resident not being a company. 

An investor being a trust or a fund would be subject to withholding tax deduction of 30%.

In order to determine entity type sub-custodian requires notarized constitutional documents.

20% withholding tax for FII's.

While paying the interest amount, the issuer of the bonds will deduct 20% tax at source.

Capital gain tax rate is 15% on capital gains (including capital gains on sale of listed / unlisted securities) received by any non-resident.

CGT waiver still in place for Government Securities.

Effective 1 July 2018, in order to avail reduced tax rate or tax exemption due to double taxation treaty, non-resident investors need to obtain a tax certificate from the local tax authority NBR and forward to subcustodian via their local tax agent. Until a copy of the tax certificate is furnished to the issuer, the issuer will apply the standard rate when withholding tax from dividend or interest income.

Belgium
Canada
China
Denmark
France
Germany
India
Indonesia
Italy
Japan
Korea (South)
Malaysia
Mauritius
Myanmar
Netherlands
Norway
Pakistan
Philippines
Poland
Romania
Saudi Arabia
Singapore
Sri Lanka
Sweden
Switzerland
Thailand
Turkey
United Arab Emirates
United Kingdom
United States
Vietnam

None

15% VAT on all banking services and products.
Government excise duty on cash accounts' balance per annum

Bangladesh Holiday Calendar

• Dhaka Stock Exchange dsebd.org
• Chittagong Stock Exchange Ltd. csebd.com
• Securities and Exchange Commission secbd.org
• Bangladesh Bank bangladesh-bank.org
• National Board of Revenue nbr-bd.org