The central bank is reviewing the Securities and Exchange Commission's proposal to allow foreign brokerage houses to take share-trading commission for the investors they bring to Bangladesh.

The SEC's reasoning behind the proposal is that many brokerage houses are interested in bringing in foreign investors to Bangladesh -- but only in return for commission.

But the current rules do not permit the local brokers who act as agents for foreign brokerage houses to share commission with them.

The SEC sent a proposal to the Bangladesh Bank a year ago -- but it is yet to be approved. The SEC raised the issue at yesterday's meeting with BB Governor Atiur Rahman, representatives of Insurance Development and Regulatory Authority (IDRA) and other regulatory bodies.

Rahman right away called in the officials of the related departments and directed them to make a decision after a quick assessment, an official present at the meeting told The Daily Star.

Salehuddin Ahmed, the then BB governor when the proposal was made, said the permission for commission for brokerage houses abroad would be given but with strings attached so that “capital flight do not occur in the guise of commission”.

The conditions were: foreign brokerage houses must maintain full-fledged offices in Bangladesh, their commission cannot be more than the local brokerage houses and they cannot repatriate the full commission amount.

Also discussed at yesterday's meeting was the impending BB circular which stipulates all banks and non-bank institutions to forward reports on suspicious transactions to the central bank's financial intelligence unit.

News: The Daily Star/Bangladesh/22-Nov-12