CMSF comes out big to support the market
Most of the undisbursed cash dividends in listed companies have already been deposited in the Capital Market Stabilization Fund (CMSF), while the scenario is quite the opposite for undisbursed stocks.
According to Thursday’s report from the CMSF – a special entity the securities regulator set up in August last year to use unclaimed assets of investors within listed companies – Tk 460 crore and shares of they were handed over Tk338 crore worth, against the expected cash of Tk609 crore and shares worth more than Tk8,100 crore.
More than 60% of eligible companies transferred their undisbursed cash dividends and unredeemed public subscription, while only 35% of companies transferred their unclaimed stock dividends or unallocated rights shares.
With the total assets received worth Tk 798 crore, CMSF has already become a market supporting entity and the rest of the investor wealth in the pipeline should make it large enough.
The Bangladesh Securities and Exchange Commission (BSEC) plans to take a hard line against issuers who fail to hand over all unclaimed wealth to investors by the May 31 deadline.
Citing numerous practical problems, a large number of companies have asked the regulator for several weeks.
However, it is clear that the CMSF, being governed by a board made up of experts from a wide range of fields, will emerge as a great entity by the end of this year.
What is the CMSF for?
The primary role of the CMSF is to work as a repository of investors’ unclaimed wealth, as it reimburses unclaimed money or shares on claims from beneficial owners who, in one way or another, were not demanding their money or shares from the companies involved, Md Monowar said. Hossain, the chief operating officer (COO).
Hossain gave a keynote speech on CMSF at a recent tripartite dialogue between the fund, the regulator and listed companies titled “Strengthening the Capital Market through Partnership”, where senior officials from BSEC, CMSF and leaders of listed companies, stock exchanges and midstream industries took the floor. .
Keeping market stabilization in mind, CMSF manages public money in such a way that the fund does not experience capital erosion and can create an exponential effect supporting the market, the COO told The Business Standard .
CMSF has already provided an interest-bearing loan of Tk 200 crore to the state-owned Investment Corporation of Bangladesh (ICB) and the de facto market maker is managing the fund from a separate investment account to purchase falling undervalued stocks.
The FCSM, as a sponsor, makes a subscription of 50,000,000 Tk to the Golden Jubilee Fund.
The rest of the cash over Tk 100 crore is kept in a bank as a deposit and funds.
This is the beginning, the FCBM acquires a market support for the rest of its perpetual life.
The CMSF can hold cash, invest in securities and also fund market intermediaries, in accordance with the rules.
Shares held in the CMSF account are still to be used in market support activities, but this is very possible on the advice of the regulator, Hossain said.
The CMSF could use the shares as a subscription to new mutual funds as a sponsor, the shares could be traded to stabilize the market and even the CMSF could borrow against the asset, on the advice of the regulator and the approval of its board of directors.
Going forward, the CMSF could receive and use any state funds if granted for market stabilization during market volatility, he added.
The CMSF has already settled 93% of investor claims and the remaining claims are expected to be settled within weeks, its chief operating officer said.