BSEC Authorized Representative flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- BSEC statutory basis
- The Bangladesh Securities and Exchange Commission is constituted under the Securities and Exchange Commission Act, 1993, and exercises regulatory, quasi-judicial, and rule-making powers over the capital market.
- Section 20A direction
- BSEC may issue binding directions to issuers, intermediaries, and exchanges under section 20A of the Securities and Exchange Ordinance, 1969, and breach attracts penalties.
- Insider trading prohibition
- Sections 17-18 of the 1969 Ordinance prohibit trading on unpublished price-sensitive information and fraudulent inducement; BSEC investigates and imposes sanctions.
- Demutualisation Act 2013
- The Demutualisation Act, 2013 separated ownership and management of the Dhaka and Chittagong stock exchanges, converting members into shareholders and creating independent boards.
- Public Issue Rules 2015
- These rules govern IPO eligibility, prospectus content, book-building and fixed-price methods, allotment, and post-issue obligations for equity securities in Bangladesh.
- Registration categories
- BSEC registers stock dealers, brokers, portfolio managers, merchant bankers, underwriters, issue managers, asset managers, and depository participants, each with distinct capital and conduct standards.
- Authorized representative status
- An authorized representative acts for a registered intermediary with BSEC/exchange approval, subject to fit-and-proper criteria, competency requirements, and the applicable code of conduct.
- Risk-based capital adequacy
- Intermediaries must maintain minimum capital and risk-based capital adequacy ratios set by BSEC; shortfalls can trigger suspension, restriction, or cancellation of registration.
- Client asset segregation
- Intermediaries must keep client funds and securities separate from firm assets and reconcile holdings, preventing commingling and protecting clients on insolvency.
- Front-running prohibition
- Trading ahead of a client order using knowledge of that order is prohibited market conduct; it breaches fair dealing and fiduciary duties owed to clients.
- Fit-and-proper criteria
- Directors, sponsors, and authorized representatives must have no fraud conviction or disqualification and must demonstrate competence and integrity to hold registered status.
- Change of control approval
- Material changes in shareholding, control, or business scope of a registered intermediary require prior BSEC approval; unapproved changes can void registration protection.
- IPO eligibility
- Public Issue Rules, 2015 set minimum paid-up capital, track record, free float, and financial reporting standards that an issuer must meet before BSEC approves an IPO.
- Book-building method
- Eligible issuers may price shares through book-building, where institutional bids set the cut-off price, subject to BSEC approval and disclosure of allocation.
- Prospectus disclosure
- A prospectus must disclose risk factors, use of proceeds, audited financials, management, litigation, and related-party transactions, creating liability for misstatements.
- Rights and bonus issues
- Rights issues offer existing shareholders pre-emptive allotment; bonus issues capitalise reserves. Both require BSEC approval and shareholder authorisation under applicable rules.
- Debt securities requirements
- Listed bonds require minimum issue size, credit rating, trustee appointment, covenant disclosure, and continuous reporting to holders and BSEC.
- Mutual fund scheme launch
- Asset managers must file scheme documents, appoint a trustee and custodian, meet minimum subscription, and obtain BSEC registration before marketing a mutual fund.
- Sukuk Shariah compliance
- Sukuk must be asset-backed or asset-based and structured under recognised contracts such as ijarah, mudarabah, musharakah, or wakalah, certified by a Shariah advisor.
- Private placement offering
- Private placements and qualified investor offerings have reduced disclosure but require BSEC notification and verification that investors meet eligibility criteria.
- Prospectus liability
- Issuers, directors, issue managers, and auditors can be liable for material misstatements or omissions in a prospectus, giving investors a civil remedy.
- BSEC investigation powers
- BSEC may summon persons, require documents, conduct searches, and order special audits during investigations into market misconduct or disclosure violations.
- Market manipulation
- Wash trades, spoofing, price ramping, and misleading disclosures that distort market prices are prohibited and attract fines, disgorgement, and trading suspensions.
- Investor complaints cell
- BSEC's complaints cell receives and tracks investor grievances against intermediaries and issuers, escalating unresolved matters to enforcement action.
- Graded sanctions
- BSEC sanctions escalate from warning and fine to suspension, cancellation, disgorgement, and criminal referral, depending on severity and repeat conduct.
- Continuous disclosure
- Listed issuers must promptly report price-sensitive events, quarterly and annual financials, and shareholding changes to the exchanges and BSEC.
- Related-party transaction rules
- Material related-party transactions require disclosure, independent valuation, and sometimes shareholder approval to prevent self-dealing and protect minority investors.
- Takeover threshold
- Acquiring shares above the prescribed threshold triggers a mandatory public offer under takeover rules, ensuring equal treatment of all shareholders.
- AML/CFT obligations
- Intermediaries must apply customer due diligence, screen sanctions lists, retain records, and report suspicious transactions to the Bangladesh Financial Intelligence Unit.
- Suitability assessment
- Before recommending securities, an authorized representative must assess the client's risk profile, investment objective, and financial capacity to ensure the product fits.
- Order handling duties
- Authorized representatives must execute orders promptly, allocate fairly, achieve best execution, and keep timestamped records of client instructions and confirmations.
- Unauthorized trading ban
- Executing transactions without client authorization, guaranteeing returns, or misrepresenting products are prohibited conduct subject to disciplinary and criminal sanctions.