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1.1 INTRODUCTION

To explore & confront the reality, the students are sent to investicet different

topic to acquire practical knowledge. In this context, this is very much effective

for a business graduate, because by this program they come to know what thecontemporary business situations and what are the barriers and requirements to

be a future business executive. By this program a new comer in job market

expose himself in different types of situation. He can identify himself in the real

life problem which is very much required for him for better survive and tackle

different obstacle in future in his career.

Under this program every student is assigned a topic under which he/ she haveto be engaged on particular field work in different types of organization ordifferent types of topic. Each student is required to submit a report on the topicassigned to him/ her on a group. We, Business Prince group was assigned to

study of Institution for promotion of business in Bangladesh.

This report has been prepared to serve the requirement of the program. Theprocess of preparing the report is to justify & to have a better view of the real lifecompetitive organization environment.

1.3 OBJECTIVES OF THE REPORT

The objectives of the study are as follows:

To know about support service instituions in Bangladesh.

To know the detail activities of chamber of commerce and industry.

To know the detail information of stock exchange.

To know about Dhaka stock exchange.

1.4 METHODOLOGY

To conduct a study properly designing of the process is essential because

reliability and validity of the outcomes of a study depends on the reliable data

and information. In this connection some activities has been carried out to collect

data and information. To attain the objective, I collected data & information. Data

of the report are collected from secondary sources;

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Secondary sources:

Websites:www.chittagongchamber.comwww.dhakachamber.com,www.dsebd.com,www.fbcci-bd.org,

1.5 LIMITATIONS

I faced the followings limitations:

As business organizations like DSE is sensitive organization, anyleakage of internal information may fall a great impact on market. So I

do not have access to all information.

The executive of the DSE is always busy & I could not get access to

all the areas required for the report. Thats why I have to collect

information basically through Secondary sources.

Time was a constraint for my report, because short time is not enough

to cover the scope of the report.

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2.1 Introduction2.2 Classes of Business Institution2.3 Support Services of Government Institutions in

Bangladesh

2.4 Trade Association

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2.1 INTRODUCTION

Association, agency or organizations which are established and conducted forthe improvement of a countrys internal and external businesses are called

support services of institutions.

The basic objective of these institutions is to provide assistances for thedevelopment and promotion of the different branches of businesses. To progressthe industries of a country many government, semi- government and privateorganizations are exist to assist. These organizations and institutions areinvolved to create a favorable business environment.

2.2 CLASSES OF SUPPORT SERVICE BUSINESS INSTITUTION

Broadly they may be grouped into three classes, viz. private voluntaryorganizations, government sponsored organizations and governmentorganizations.

A. Privet voluntary Organizations1. Trade Associations such as the Chamber of Commerce and Industry,

the Publishers & Book Sellers association etc.2. Produce Exchange, Stock Exchange3. Fairs and Exhibition4. Trade delegation & Trade mission.

B. Government sponsored Organizations

1. Bangladesh Bank2. DEPZ3. BISIC4. Insurance corporation of Bangladesh5. BSTI

C. Government Organizations1. Board of Trade such as Jute board, Tea Board, Export Board, etc.2. Commercial Library & museum3. Export Promotion Bureau.4. Customs Unions5. BIRRI.

These organizations are meant to aid commerce and industry of the countrywithout being guided profit motive.

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2.3 SUPPORT SERVICES OF GOVERNMENT INSTITUTIONS INBANGLADESH

In Bangladesh with the help of several institutions government tries to assist

business. The services by the government institutions to business sector arecalled support services of the government institutions. About government

support services institutions are discussed below:

Export promotion bureau: Export promotion bureau plays a significantrole in promoting export business of Bangladesh in abroad especially in

which countries Bangladesh embassy is working. This institution offers

many benefits to the exporters, search for the market and gives effort to

expand the market.

Office of chief controller of imports and exports: To help the importbusiness determination import policies is an important task of the

government. Besides, to stop import of unnecessary and harmful goods

providing import permission certificate is significant. Though controlling

import business is very complex, it is controlled by the chief controller of

imports and exports.

Ports: Shipping and clearing facilities or goods in exports are donethrough ports. Ports are controlled by the government. In Bangladesh

Chittagong and Chalna ports contribute a lot in export import under

control of government.

National Board of Revenue (NBR): To determine and collect duties andtaxes from the business sector National Board of Revenue (NBR) and.

Customs and Excise Division are doing their jobs. These institutions

collect revenue for the government. They also are as the watchdogs for

protecting illegal business

Government banks, stock exchange, produce exchange: Governmentprovides financial assistance to the businesses through different banks.

Besides, government contributes to expand internal business of thecountry through stock exchange and produce exchange.

Insurance company: Government reduces the risks of business throughstate-owned insurance companies.

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2.4 TRADE ASSOCIATION

Trade association is the association of businessmen of a country under the laws.

The purpose to form this association is to increase the opportunities of the

business sector and preserve these. Some associations are formed by the samebusinessmen e.g., Jute Merchant Association whereas some are established

by different types of businessmen, for example, Dhaka Chamber of Commerce

and Industry.

In many cases relevant to business and in the time of economic crisis these

types of associations provide valuable advices to government. Trade

associations play an important role in economic sector, export-import, tax-

system, banking, Insurance and industrialization of a county.

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3.1 Chamber of Commerce and Industry

3.2 Formation of Chamber of Commerce and industry

3.3 Objectives and Functions of Chamber of Commerce and

Industry

3.4 Importance or Role of Chamber of Commerce and Industry

3.5 Chamber of Commerce and Industry in Bangladesh

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3.1 CHAMBER OF COMMERCE AND INDUSTRY

Chamber of Commerce and Industries is a voluntary organization formed for

expansion of business (Trade, commerce, industry) of any particular area or

town or district. It directly and indirectly helps in the expansion of industry and

business. Normally, in mixed economy businessmen voluntarily form these types

of organizations for broaden of business and industry. In some countries

Chamber of Commerce and Industries are formed under both government and

private business.

The main objective of this type of organization is to develop and expand

business and thereby protecting the interests of industries and business

enterprises. This type of organization is not formed for the purpose of earning

profits. Rather, it provides different types of directives and advises to

industrialists and businessmen. It resolves disputes arising from business andalso expresses opinions relating to business laws. Such body is registered under

the domestic laws prevailing in the country. In Bangladesh there are Dhaka

Chamber of Commerce and Industries (DCCI), Federation of Bangladesh

Chamber of Commerce and Industries (FBCCI), American Chamber of

Commerce and Industries (AMCHAM), Chittagong Chamber of Commerce and

Industries etc. exist.

A separate committee is formed under the secretary for directing Chamber of

Commerce and Industries. The secretary is all in all of the chamber. He invites

meetings, conducts management functions and prepares program. He has toabide by the directives of directors of Chamber of Commerce and Industries.

These kinds of organizations also place their demands for controlling price,

monitoring market, tax rebate, cash subsidy to the government before placing

the budget.

3.2 FORMATION OF CHAMBER OF COMMERCE AND INDUSTRY

Chamber of Commerce and Industry is formed, registered, directed and

controlled according to Company Act. It is a limited liability company. The word

Limited is written at the end of its name. Still it enjoys all the advantages of

Limited Liability Company and its liability is limited. Chamber of Commerce and

Industry is a non- profiteering voluntary organization. It does not operate any

business activities. All Chamber of Commerce and Industries, small and large,

are formed and controlled under Company Act 1994 in Bangladesh.

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3.3 OBJECTIVES AND FUNCTIONS OF CHAMBER OF COMMERCE ANDINDUSTRY

Chamber of Commerce and industry helps to develop and expand of business

and industry in a country directly and indirectly. For gross development of

economics it does following functions:

Development of industry, trade and commerce: For the development ofindustry, trade and commerce chamber of commerce and industry makes

various strategies and particular principles which accelerate the economic

development of a country.

Acting as agent of members: As an agent of members chamber ofcommerce and industry accomplishes numerous functions on behalf of its

members. It informs the government about the problems and objections ofmembers in the businesses arena and wants the remedies from the

government to run the businesses in due ways.

Collection and preservation of information: Chamber of commerce andindustry collects and preserves rare and valuable information and news

about industry, business and commerce of home and abroad. Members

may be benefited by using these storing information and news.

Establishing welfare institutions: It establishes and conducts businessschools, colleges, business library, share market, training institutions and

other welfare organizations. These institutions play a wonderful role in the

field of industrial and commercial development.

Government advisor: Chamber of commerce and industry also plays roleof advisor of government. It gives advices to government about businesses

to make business policy and legislate different business laws. It provides

guidelines to government to develop the industry, trade and commerce.

Issuing certificate of origin: In international business chamber ofcommerce and industry has a fundamental function. It ensures the legality

of emergency-documents used in import-export business. It also issuescertificate of origin about the product for the purpose of confidence building

of importers.

Market survey: For ensuring profitable marketing of goods of its memberschamber of commerce and industry conducts market survey. From this

research, it publishes important and valuable business-related data from

which members can take fruitful decision about their businesses.

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Acceptance to foreign bill of exchange: Chamber of commerce andindustry helps its members in credit transaction of international business. It

accepts foreign bill of exchange to assist its members.

Safe-guarding trade mark: Chamber of commerce and industry helps its

member to save their trade marks and patents.

Arbitration: Chamber of commerce and industry plays a significant role asan arbitrator to mutual the conflicts among industrialists and businessmen.

So, avoiding court members can save time by taking helps from it on

conflicts.

So, it is clear that chamber of commerce and industry is formed for the sake of

interests of businessmen.

3.4 IMPORTANCE OR ROLE OF CHAMBER OF COMMERCE ANDINDUSTRY

Bangladesh is a developing country. Foreign trade of this country is dependent

on import. Chamber of Commerce and Industry of any country centers around a

city, location, and business area and develops. The important role Chamber of

Commerce and Industry plays in the business of our country are mentioned and

discussed below:

Economic development: Chamber of Commerce and Industries aresituated at different places of the country. If they can develop industry,

business in their own sector, per capita income will increase and

purchasing power of people will also increase.

Creating employment opportunity: By development of industry, trade,commerce Chamber of Commerce and Industry can create new

employment opportunities in the country and solve the unemployment

problems.

Solving disputes: If for any reason disputes arise among businessmen

regarding business transactions, Chamber of Commerce and Industriestry to resolve these disputes and create a positive environment in the

business.

Placing demands to the government: Chamber of Commerce andIndustries also place their demands regarding minimum tax rate, rebate

and excise duty, and also tax holiday facility to the government before

placing the annual budget.

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Reducing unequal competition: All industrialists, businessmen cometogether and form a unique policy for business and agree to comply with

that policy. Implementing this assurance, unequal competition is reduced

among the businessmen and a fair environment exists in operating

business activities.

Help formulating laws favorable to the business: Chamber ofCommerce and Industry is always alert so that the government formulates

laws in favor of business, trade and commerce. Unfavorable laws will not

only hamper the business (activities) but also it will take the economy of

the country backwards.

Training program: Chamber of Commerce and Industries arrange fortraining programs to create new entrepreneurs and at the same time

increasing the skills of existing ones. This training helps them to operate

business more efficiently.

Research works: One of the major functions of Chamber of Commerceand Industries is to conduct research works based on industry, business,

trade, government policy, prevailing business environment in the country,

production, etc. The result of these researches will provide guidelines to

solve the prevailing problems of industry and commerce, and it will also

point out the probable future problems and ways to solve them.

Exchange of information: Business environment and surroundings areever changing. It is desirable to collect information about the changing

environment of the business. If the businesses do not get sufficientinformation about the changing environment and situations, there is a

possibility to suffer loss. Chamber of Commerce and Industries collects

the relevant information and routinely publishes them in their own

publications. This helps the business community to get information early

and timely.

Developing export trade: Chamber of Commerce and Industries providecertificate of origin to its members and about quality of products. They

want to create a good image of locally produced goods to the importers

and foreigners. For this objective they provide different certificates of

origin and quality to their members. This effort increases the export and

develops the economy.

Creating fair business environment: For the development of industryand operating business properly in any country, a fair environment of

business is desirable. Chamber of Commerce and Industry creates such a

fair environment in a country. Business activities can operate smoothly in

this type of environment.

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3.5 CHAMBER OF COMMERCE AND INDUSTRY IN BANGLADESH

There is so many Chambers of Commerce and Industry exist In Bangladesh. We

will try to give a glimpse of some of them.

Federation of Bangladesh Chamber of Commerce and Industries (FBCCI)

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) is

the apex representative organization safeguarding the interest of the private

sector in trade and industry in Bangladesh.

http://www.fbcci-bd.org

Dhaka Chamber of Commerce and Industries (DCCI),

Dhaka Chamber of Commerce & Industry (DCCI) the voice of SMEs serves as

the first point of business contact for penetration into new market and a vibrant

platform putting forward facts-based opinions, suggestions and

recommendations for a brighter tomorrow in the sphere of trade, commerce and

the overall economy. DCCI, the largest and most active Chamber of the country,

established in 1958, was incorporated under the companies Act, V11 of 1913 as

Year of Establishment : 1973

Established under : Trade Organization Ordinance, 1961

And Companies Act, 1913.

Type of members : (1) Chambers of Commerce and IndustryA Class Chamber

B Class Chamber

: (2) Trade and Industrial Associations.

A Class Association

B Class Association

: (3) Joint Chamber (with Foreign Countries)

Total Number of

Member bodies

: (1) Chambers of Commerce and Industry

A Class Chamber 38

B Class Chamber 32

: (2) Trade and Industrial Association

A Class Association 277

B Class Association 6: (3) JointChamber

(with Foreign Countries) 16

Total: 369

Composition of Board

of Directors

President -- 01

First Vice-President -- 01

Vice-President -- 01

Directors -- 04

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a limited company on March 10, 1959. It serves as a model of non-profit,

service-oriented organization. It has rendered more than four decades of very

useful services for the development of business and industry in Bangladesh.

It has four classes of membership: General, Associate, Town Association and

Trade Group. The Chamber is run by a Board of twenty-four Directorsrepresenting all classes of membership. One third of the Directors retire every

year. A President, a Senior Vice-President and a Vice-President are elected by

the Board for a term of one year. The President is the Chief Executive of the

Chamber. The Board of Directors is assisted by a number of Standing

Committees on various important business-related subjects and by a full fledged

Secretariat.

http://www.dhakachamber.com

Chittagong Chamber of Commerce and Industries

The Chittagong Chamber of Commerce & Industry (CCCI), established in 1959,

is a pioneer Chamber in the country. Like other Chambers, it consists of firms,

companies and corporate bodies engaged in trade, commerce, industry,

agriculture, manufacturing etc. The Chamber represents the prime maritime port

city and commercial capital of the country, endowed with country's biggest

industrial base and highest business activities.

The basic objective of Chittagong Chamber is to promote and protect the trade,

commerce & industry of Bangladesh in general and those of Chittagong in

particular, and also to enable the government and other authorities to performthese functions by rendering assistance, information and advice.

http://www.chittagongchamber.com

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4.1 Concept of Stock Exchange

4.2 Features of Stock Exchange

4.3 Role of Stock Exchange in Economic Development of theCountry

4.4 Causes for the fluctuation of Prices of Shares and Securities

4.5 Distinction between Produces Exchange and Stock Exchange

4.6 Distinction between Money Market and Capital Market

4.7 Dhaka Stock Exchange

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4.1 CONCEPT OF STOCK EXCHANGE

Stock exchange is a structured and organized market where shares, stocks,

debentures and securities of registered public limited companies arc bought and

sold. Transactions of debentures of government and autonomous organizationsare incurred in this market. In other words, it is an entity that gives trading

facilities for traders and stock broken to trade shares, stocks, debentures, bonds

and securities. The share companies must be listed in the stock exchange to

Sell. Without achieving the status of enlisted company cant sell its shares here.

Stock exchange creates the opportunity to organize capital and also gives the

chance to encourage investors to invest. So, stock exchange is called the capital

market, individuals who are engaged in share-business is called member of

stock exchange. They can buy and sell stocks though different broker houses. A

shareholder can sell his shares to anybody and also can buy shares of others.Like a product share is not visible here. The ownership of sham goes to

anothers hand by exchanging of money.

4.2 FEATURES OF STOCK EXCHANGE

There are several features of stock exchange. Among them main features are

mentioned below:

Nature of market: Stock exchange is an organized market. Here shares,

stocks, securities, debentures of different government and autonomous

organizations and also public limited companies are bought and sold.

Restrictions: Without the members of stock exchange nobody can takepart in the transaction in this market.

Nature of transaction: Transactions of shares may occur in cash orcredit.

Transaction time: Transactions must accomplish within specific time-period.

Direction: Stock exchange is directed by a board or committee. Toconduct ft the mentioned committee legislates rules and regulations anddesigns plans.

Membership: To get the membership for participating in transactionshere, an individual is to buy shares and pay fee.

Office: It has an office where members come in working days to buy-sell.Responsibility to direct: Responsibility to direct the stock exchange is

upon the selected directors.

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4.3 ROLE OF STOCK EXCHANGE IN ECONOMIC DEVELOPMENT OFTHE COUNTRY

Formation of capital: Capital can be formed by the help of stockexchange. Joint-stock companies and autonomous organizations collect

their capital from the stock exchange. In stock exchange shares, stocks,

securities and debentures are sold by joint-stock companies, government,

semi-government and autonomous organizations.

Facilitating company growth: Stock exchange provides the facilities tothe companies to grow more. A merger agreement by the help of stock

exchange is a common and simplest way for companies to grow by

acquisition. Acquisition is an opportunity to broaden product lines,

increase channel of distribution, increase market share and acquire

necessary business assets.

Mobility of capital: Stock exchange is the market where shares aretransferred from one member to another. Through selling and buying

mobility of shares-capital increases which helps the dynamism of

economics.

Favorable atmosphere of Investment: It creates favorable atmosphereof investment. In the presence of this market, investors are encouraged to

form different industries.

Proper guideline in investment: Newspaper and other media publishnews about the transactions of shares. By knowing the news general

public can understand and evaluate the companies development. As a

result, people can realize the strengths and weaknesses of the companies

and they can be able to make the decision about the proper investment.

Security in Investment: Investment in shares is secured by the sockexchange. Without obeying rules and regulations of stock exchange

nobody can buy or sell shares.

Encouraging savings: In this market investors can sell their shares toliquidate money at any time. So people are encouraged to save. People

buy shares and securities of different business organizations as products.

If necessary, people can sell these and collect cash.

Profit sharing: Stock exchange is a place from where both casual andprofessional investors can make profits. Profits are gained through

dividends and stock price increases.

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Helps Industrialization: To explore the industries in a country capital is asignificant precondition. Stock market helps to accumulate capital by

which a countrys industrial sector can be expanded.

Employment opening: It is necessary to invest in different productive

sectors to lessen unemployment problems. By gathering capital throughshare market, it can invest money in different sectors which leads to

create a huge opportunity of employment.

Raising government capital: Government may need to borrow moneyfor implementing various development projects e.g. sewage and water

treatment works or housing estates. To finance in different infrastructure

projects government can sell bonds in the stock exchange. These bonds

are bought by the public and capital can be raised through loans.

Barometer of the economy: Share prices movement and stock indexes

are two indicators of the general trend in the economy of a country. Shareprices tend to rise or stable indicates the sign of stability and growth of

companies and economy of the country. In contrast, economic recession,

depression and financial crisis lead to crash the stock market.

From above discussion we can say that in investment, industrializations, social

development, planning and implementation stock market has a mentionable and

vital role.

4.4 CAUSES FOR THE FLUCTUATION OF PRICES OF SHARES ANDSECURITIES

Prices of shares and securities fluctuate time to time like other products prices.

Demand and supply laws are activate in this market. Prices fluctuate here rapidly

than other products prices. Share prices are influenced by multiple factors.

Causes for the fluctuation of prices of shares and securities are stated below:

Business condition: There is a close relation between price fluctuationsof shares-securities with business condition. Good condition of business

increases the price of shares and terrible condition leads to decrease theprice. Profit falling influences the share price. Business conditions are

broadly two types - boom and depression. In boom market share prices

increase and in depression share prices decrease.

Rate of dividend: Share prices are related with the change in rate ofdividend. Investors invest theft money to cam profit. So, the change in

rate of dividend influences the price of shares.

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Bank rate: Bank rate has a special influence on price changes of shares.Increased bank rate encourages investors to save money in hank. As a

result, investors sell their shares to liquidate money for saving purpose

which increase the supply of shares in the market and prices diminish On

the other band, decreased bank rate encourages investors to invest

money on shares high expand market-demand of shares. Growingdemand increases the price of shares.

Inflation and deflation: Inflation lessens the power of purchase ofmoney. A lot of amount of money exists in people hands during inflation.

In tips Lime people tries to gel sonic opportunities by investing excess

money in share market. So, demand of shares increases which increases

the prices of shares. In time of deflation, share prices decrease by the

influence of fewer demands.

Monetary and credit policy of the central bank: Increase and decreaseof prices of shares and securities are mostly influenced by the monetaryand credit policy of the central bank. If central bank follows weak

economic and credit policy, lack of money is seen in the market. Investors

who already have taken credits from bank are eager to repay loans even

by selling their shares. In this situation supply of share are increased and

for excess supply than demand price decreases and market becomes

bear market.

Government fiscal and taxing policy: The fiscal and taxing policy of thegovernment influences share prices. If the government increases duty and

tax, prices of goods increase and sale reduce comparatively. A reductionin sale indicates a decrease in revenue. Decrease in revenue means

decrease in rate of dividend. If the rate of dividend decreases, share price

of the company will also decrease. On other hand, if company gets tax

holiday facility, tax rebate and other benefits from the government the

companys profitability increases. Increased profit means an increase in

rate of dividend and increase in share price.

Economic depression: Economic depression affects the share marketand entire economy of the country unfavorably. During economic

depression purchasing power of people decreases at a significant rate. At

that period share prices decrease in the capital.

Change In the policy of investment organizations: Investmentorganizations like banks, insurances, board of investment etc. if decides

to sell the shares of any particular business, then the price of shares of

that company reduces. On the other hand if the investment organizations

decide to make investment in a particular organization, share price of that

organization increases.

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Hartal-strike: Hartal-strike has a relation with business aid industries.During strike production decreases but fixed expenses are borne by the

companies. During these period companies profitability reduces.

Continuous strike and Hartals adversely affect the production of the

companies and they incur loss. Decrease in profitability and loss reduces

share prices.

Import and export policy of the government: Share prices alsofluctuate depending on import and export policy. If the government

provides any special rebate, export facility on export of any particular

goods, profitability of those exporting companies will probably increase.

People become more interested to purchase the shares of those

exporting companies under these facilities. This increases demands for

shares and increases share prices. On other hand, if the mentioned

facilities are withdrawn that the opposite happens.

Conduct of members: Price fluctuation also happens depending onconduct of members and rumors, if any rumor can spread in favor of any

particular company, share prices of that company will increase and vise

versa. Again if any influential member intentionally acts in favor of any

company or purchases shares of any particular company, then share

prices of that company will increase.

Other factors: Some other factors are also responsible for pricefluctuation of shares like change in any policy of the state, change in the

members of ministry, civil war, election, international incidents etc.Besides for any random situation share price fluctuates such as sudden

flood, landslide etc.

4.5 DISTINCTION BETWEEN PRODUCES EXCHANGE AND STOCKEXCHANGE

In which exchange products are bought and sold is known as produce exchange.

On the other hand, stock exchange is a structured market where shares and

securities of listed companies are bought and sold.

There are various differences between these two exchanges discussed below:

Nature of products: In stock exchange only shares, stocks and otherkinds of securities are bought and sold. In structured produce exchange

nonperishable agricultural goods e.g. jute, cotton etc. are bought and

sold.

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Nature of transactions: Transactions occur here according to name ofthe shares and securities. In produce exchange transactions ahead

according to the classification of goods through showing samples.

Quality of products: No judgment is applied here to measure the quality

of shares. Companys image is considered to buy and sell of shares.Determination of quality of agricultural goods is required. Goods are

classified depending on quality.

Existence of products: Shares which have no existence in the sharemarket cannot be bought and sold. Through advance agreement in

produce exchange buying and selling of goods can be accomplished even

if there are no existences of those goods at present but can be produced

in near future.

Face-value: Each share and debenture in this exchange has a fixed face-value. Goods of produce exchange have no specific face-value.

Safeguarding interests: Through stock exchange it is tried to developthe industrialization. In this exchange the interest of agricultural producers

are tried to save through produce exchange.

Objective: Collecting capital by selling shares is the main objective here.The objective of this market is procuring and supplying raw materials for

industries.

Market control: There is no scope of international transactions in stockexchange. By produce exchange trying to controlling the market

internationally is visible.

Rate of exchange: Share has no wholesale rate or price but in theproduce exchange goods are bought and sold at wholesale rate or price.

Classification: Shares are classified here depending on companysperformances. Goods are classified in the produce exchange relying on

quality.

4.6 DISTINCTION BETWEEN MONEY MARKET AND CAPITAL MARKET

Both money market and capital market are important in the financial market.

Transactions of money and financial assets are occurred in both two markets.

Several differences are visible between these two markets. Distinctions between

money market and capital market are mentioned and discussed below:

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Definition: The market where transactions of money and financial assetsare accomplished for short time is called money market. Capital market is

meant that market where transactions of money and financial assets are

occurred for a long period.

Time: In money market transactions are accomplished for one or lessthan one year. In capital market transactions are for long time.

Risks: Since investment of money market is for a short- term, the risk ofmoney is low. But in capital market the risks of money and loan defaulter

are high.

Instruments: Cash taka, treasury bills, commercial papers are used asthe instruments in money market. Shares, debentures, long-term bonds

etc. are the instruments of capital market.

Transaction costs: For fewer formalities in money market transactioncost is minimum. Transaction cost is high in capital market. Because

many formalities are required in long-term transaction.

Government involvement: Government is directly involved with moneymarket. Government tries to stable the economic process of a county

through money market. But in capital government involvement is minimal.

Only for controlling in a special time or to meet the demand of money

government make an involvement with capital market.

4.7 DHAKA STOCK EXCHANGE (DSE)

The DSE was first incorporated as the East Pakistan Stock Exchange

Association Limited on April 28, 1954. However, formal trading began in 1956,

196 securities listed on the DSE with a total paid up capital of about Taka 4

billion. On June 23, 1962 it was renamed as East Pakistan Stock Exchange

Limited. After 1971, the trading activities of the Stock Exchange remained

suppressed until 1976 due to the liberation war and the economic policy pursued

by the government.

The trading activities resumed in 1976 with only 9 companies listed having a

paid up capital of Taka 137.52 million on the stock exchange. In May 13, 1964 itwas renamed as Dacca Stock Exchange Limited.

In 1986 it was renamed as a Dhaka Stock Exchange Limited. As of 30th

December, 2008 there were 412 Securities listed on the DSE with a market

capitalization of Taka 1043.80 billion. Total turnover value as on December 30,

2009 was taka. 4.31 billion.

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Major Events of DSE:

Incorporated as East Pakistan Stock Exchange

Association Ltd.

28 April 1954

Start of Formal Trading: 1996

Renamed as East Pakistan Stock Exchange Ltd. 23June 1662

Renamed as Dacca Stock Exchange Ltd. 13 May 1964

Trading Suspended under new State Policy 16 December 1971

Trading Resumed in Bangladesh 16 August 1976

Starting Of All Share price Index calculation 16 September 1986

Share price Indices calculation on basis of IFC

Designed formula

1 November 1993

Starting of Automated trading 10 August 1998

Starting Of DSE-20 Index calculation January 2001

Starting Of DSE General Index calculation 27 November 2001

Start of CDS through CDBL 24 January 2004

Exchange Profile:

Type Stock Exchange

Location Dhaka, Bangladesh

Owner Dhaka Stock Exchange Limited

Currency Taka

No. of listings 671Market Cap USF$15 billion

Volume US$1.43 billion

Indexes DSE 20 Index

General Index

Website www.dsebd.org

Logo

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5.1 FINDINGS

I have identified negative side of the share market of Bangladesh.

Lack of institutional investment: A strong capital market in any countrycannot be established based only on individual investments. To boost up

the capital market institutional investment is required. In our country the

number of institutional investment is very small, which is the main reason

for long term depression of the share market.

Manipulation in trading: In the share market of our country group of

dishonest brokers and members exist who intentionally manipulate the

share market by fictitious transactions depending upon the condition of

the market. This results small investors loose everything all of their

investment. On the other hand, few brokers become from nothing to

everything. This type of manipulation is a hurdle for the development of

the capital market because investors loose their reliance.

Frustration of the investors: Slow economic activities, political unrest,

economic depression of the South-East Asia and its negative impact and

above all the continuous fall of share price create frustration in the mind of

investors in our country. As a result, they (investors) do not want to invest

their hard-earned money. But because of manipulation of a group of

brokers, they have lost everything. Thats why the share market is not

getting its desired speed.

Shortage of fundamental based securities: One of the weaknesses of

capital market in Bangladesh is that it lacks blue chips, good shares and

debentures. Shortage of securities is another reason. Few types of blue

chips are not sufficient enough to attract investors to the share market.

Lack of transparency: The listed companies in the share market do not

hold Annual General Meeting (AGM) regularly. Investors are not satisfied

with the annual general report of most of the companies. They purchase

shares at a high price but the declared dividend is low. This is one of the

reasons that investors are not attracted to the share market.

Poor supervision: The major function of Securities and Exchange

Commission (SEC) is to control and monitor the share-market.

Unfortunately SEC has failed to exercise its main function to control the

share market. The commission is not taking any actions against the listed

companies that violate the rules of SEC. Besides reluctance in

investigation of manipulation of broker house, passing of time in h actions

against them are some of the accusations against SEC. The weakness in

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monitoring by the Securities and Exchange Co creates lack of reliance in

the minds of investors.

Lack of clear-cut concept about the market: Most of the investors of

our county do not have clear concept about share market. They do not

make investment based on the assets and liabilities or fundamental of

companies rather on rumors. As a result, investors are negatively

affected.

Lack of co-ordination: There are two bodies in our share market, one is

the Securities and Exchange Commission (SEC) that controls the share

market and the other is the Dhaka Stock Exchange (DSE) and Chittagong

Stock Exchange (CSF). Often conflict arises between these two bodies

regarding circuit breaker, lock in, netting vs. rolling. The lack of co-

ordination between these two bodies is clear that acts as barriers in the

development of market.

Tax burden: Tax rate of the listed companies in our country is very high.Thats why companies are relucr topsy dividend to shareholders. Besides,

tax at source is deducted on dividend to shareholders which is double

taxation. Lack of tax rebate cannot speed up the market.

Lack of public confidence: After the share market fall in 1996 none of

the involved persons were punished or brought to law. The small

investors who have lost lacks of their invest and became hand to mouth

have no confidence on the share-market. Lack of public confidence is one

of the major problems of share- market Prompt steps should be taken to

remove these problems of share-market. In this case the concerned

including the government should come forward. Only then share market

will be able to overcome its problems and play its role properly.

5.2 CONCLUSIONS

Business institution like share market is the most sensitive organisation of oureconomy. If economy raises incomes alleviates poverty and moves the countryahead. And in this big capital market DSE plays an important role to attract theinvestors .The country still must guard against threats for its capital markets. So,

all markets need independent and transparent regulatory oversight to investorsto minimize risk. DSE has gained the confidence of public and is able to attractmore and more funds.

DSE will introduce internet based trading system stock trading .Through thissystem any body can buy and sell stocks by giving the order through internet,usually on a brokers form. And also the people can observe the market situationon the internet that will enable e-commerce facilities in the country. At the end of

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the year 2010 DSE is expected to become one of the major stock markets in thisregion.

Institute for Promotion of Business in Bangladesh plays a vital role in economy ofBangladesh. So, its a great advantage to us that we were assigned in this topic.

5.3 RECOMMENDATIONS

In the previous chapter I have talked about some problems which I haveobserved in Institution for Promotion in Business, specially on share market.Its my responsibility to contribute something in my workings so here I suggestsome recommendations of the identified problems.

Share market improves the economic condition ol any country. So, concaitraftonshould be given to improve share market ultimately to progress the economy of a

country. Following mentioned steps can be taken of improvement of share-market:

1. Many investment and merchant banks should be given parmission to

conduct their operations.

2. Members of stock exchange must be intreased.

3. Manipulation of shares should be stopped through effective strategies.

4. Supply of financial tools must be increased according to demand.

5. Shares of government business organizations should be sold in the stock

exchange.

6. People must be educated about the share business.

7. Lock-in system should be started for foreign investors and it must be ass

wed that those investors cannot return their investment before a certain

period.

8. Being the directors of listed companies must be ptohibited to be brokers

and they should be prevented from direct investment in share business.

9. Publicizing wrong information in prospectus must be under sentence.

10. Among investors and officials of SEC who will be hivolved in gambling

and manipulating in share business must be under sentence through laws.

11. Dishonest brokers must be punished.

These are the recommendations of the identified problems and it is reallyexpected that these recommendations will help share marke in many ways.

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5.4 BIBLIOGRAPHY

Books:Bhattacharja, Durgadas, (2007-2008), Inroduction to Business Organisation,

Mousumi Prokasani, Dhaka.

Haque, A.T.M Faizuli, (July 2009), Inroduction to Business, Abir Publication,

Dhaka.

Hossan, Farooq; Ahammad, Issa and Ferdous, Laboni, (2011), Inroduction to

Business, Ayifa Publication, Dhaka.

Thesis :

Thesis no: WUBL-47, Md .Sultan Mahmud, ID: WUB-01.06.09.193

Websites:www.chittagongchamber.comwww.dhakachamber.com,www.dsebd.com,www.fbcci-bd.org,