Dhaka Stock Exchange (DSE) kicked off the trading of government treasury bonds in its secondary market on Thursday for the first time after a lengthy 16 year hiatus.
This platform will allow the investors to buy and sell the risk-free instruments.
Earlier, in 2005, there was a transaction on the opening day of the secondary market for treasury bonds.
After that 222 bonds were listed but these bonds were never traded in the market.
However, secondary transactions of treasury bonds were conducted under the management of Bangladesh Bank (BB).
According to DSE sources, the secondary market for treasury bonds will be fully operational within the next two months.
Primary dealers will be able to trade bonds through DSE.
All classes of investors, including BO account holders, will have the opportunity to invest in treasury bonds at the Chittagong Stock Exchange (CSE), who will organize multiple trading on 30 October. Therefore, more people will be able to take part in the transactions together there.
Shaikh Shamsuddin Ahmed, a commissioner of the Bangladesh Securities and Exchange Commission (BSEC) said: "I have been waiting for the day since I joined the BSEC. It's a tremendous milestone for us. To popularize treasury bond trading, we need to simplify this trading system. And it should be open for all BO account holders. This will allow our investors to make their portfolios risk-free with a fixed income instrument.”
Asked about the long 16 year gap, a BSEC official told Dhaka Tribune that they were trying to effectively introduce treasury bonds to give investors the opportunity to invest in the fixed income sector for a long time.
Countless meetings have been held with Bangladesh Bank, Ministry of Finance and NBR in this regard.
Asking about the obstacles, the official added that the main obstacles were transactions and stamp fees.
Even if the DSE reduces the transaction fee to a nominal price, it takes time to reduce the stamp fee.
According to the exchange website, there are 222 treasury bonds listed that investors can now trade in the debt board.
Market capitalization of the bonds amounts to Tk60,297.9 crore, showed the Daily Market Statistics report of the Dhaka bourse.
The trading commenced with a transaction of a 10-year Bangladesh Treasury Bond at a price of Tk110.5 each for 1,000 units carrying a face value of Tk100.
Investors have long waited for this new fixed-income product to commence, said a chief executive officer of an asset management company.
It will allow both individual and institutional investors to buy risk-free investment instruments from the bourses without any hassle, he added.
Speaking with stock traders, Dhaka Tribune learnt that many individual investors wish to invest in treasury bonds over both banking deposit products and equities in the stock market due to their low-risk appetite.
Thanks to the added liquidity in the secondary bond market, the government can now issue bonds at a more competitive yield, said an equity research analyst of a stock brokerage company.
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