Professional Documents
Culture Documents
Investment banking companies in Bangladesh are of two types: open-ended and closed-ended.
The open-ended ones, generally referred to as mutual funds, repurchase shares in any quantity as
and when holders offer them for sales. Thus, the amount of shares of the open-ended investment
companies in market changes continually in response to public demand. Closed-ended
investment companies sell only a specific number of ownership shares. An investor wanting to
acquire shares of a closed-ended investment company must find another investor who wishes to
sell. Investment companies do not take part in the transaction. In addition to selling equity
shares, closed-ended companies issue a variety of debt and equity securities including preferred
stock, regular and convertible bonds, and stock warrants for raising funds.
Investment banks act as intermediaries between issuers and investors. The issuer sells securities
to investment bankers who in turn sell the securities to investors. The investment banks own the
securities until they are resold. For firms seeking to raise long-term funds, investment banks
provide assistance through a number of functions including underwriting, marketing of
securities, corporate finance, sale and brokerage, asset management and research. In
underwriting, investment banks can protect themselves by forming a syndicate, which allows
them to diversify the risk. One investment bank acts as the managing underwriter that oversees
the underwriting activities of all members of the syndicate.
In the process of marketing, securities are typically sold through a selling group consisting of the
sales division of the underwriting syndicate and selected retail brokerage houses. Another
significant development in investment banking is the 'unsyndicated stock offering', in
which, the corporation distributes the entire stock issue directly to institutional investors rather
than syndicating them through a retail distribution network to individual investors.
structuring.
The main function of investment banks in sales and brokerage is to provide full-service
brokerage to retail and institutional investors, both foreign and local, in the secondary
market.
million.
In addition to ICB, a number of commercial banks also carry out investment banking functions
in Bangladesh. The Securities and Exchange Commission (SEC) issues certificate of
registration to institutes intending to operate as issue manager provided that they have a capital
of at least Tk 2.5 million. The minimum capital requirement for an institution to become
eligible for the certificate for operating as underwriter or portfolio manager is Tk 10
million.
The SEC has a code of conduct for issue managers, underwriters and portfolio managers
and is empowered to suspend or cancel the certificate of registration for its violation.