Businesses need money to get started, and even more to expand and grow. When setting up, entrepreneurs raise some of this from savings, friends and families, and the rest from banks. Capital market is one of the unique characters offering to participate in the ownership of business and establish ventures.
The capital market plays various roles in an economy. It acts as an intermediary between surplus units and deficit units of the economy and facilitates savings into investments. By also providing liquidity of these investments, the capital market ensures optimum allocation of resources. All these activities make it the engine for the growth of the economy.
Capital market in Bangladesh is yet to play its potential role as a vehicle for financing long term investment. However, the hangover of an unpalatable historical past which saw a dramatic upsurge in the second half of 1996 only to be followed by a drastic and prolonged downswing has been successfully overcome. Discernible signs of renewed vitality have emerged.
A number of actions are in the offing to add depth to the market, increase the variety of instruments that can meet diverse investors' preferences, further promote orderly trading, enhance professional competence of market intermediaries and facilitate expeditious issuance of securities at reduced cost. In sum, Bangladesh capital market is now prepared to be harnessed in the service of the country's economic development. It is hoped that policy makers, issuers of securities, market intermediaries and investors will all join hands in fuller realization of its potential.
This report is emphasizes the brokerage operation practice in Bangladesh and internals of brokerage functions performed by IDLC Securities Limited. As well as the role of brokerage house as an intermediary is also considered. In this regard IDLC Securities Limited has been taken as an example, its, services, rules and regulation, and activities of various department have been discussed.
However, individual clients cannot trade (buy and sell) directly. They need to choose a broker house to trade through authorized traders. All brokers must have access to the system (either directly or indirectly) to settle stock exchange transactions. However, only some brokers, upon obtaining certificate of registration from the SEC, will become full service participants and will be able to manage accounts on behalf of customers.
A fully owned subsidiary of IDLC Finance Limited has been set up to cater to the needs of the capital market needs of the institutional and individual clients. IDLC Securities Limited offers full-fledged international standard brokerage service for retail and institutional clients and foreign clients. Having seats in both Dhaka and Chittagong Stock Exchange Limited, it is inevitable that IDLC Securities Limited became the trusted broker to most of the foreign, local institutional investors and high net worth clients investing in Bangladesh and abroad.
The development of capital market has been receiving heightened attention from the policy-makers in recent years. One explanation lies in the fundamental shift of development strategy reflected in the nearly universal embrace of the private sector as an engine of economic growth. Capital Market now has become a honey comb and share investment is a buzz word in al over the country. A number of people are now involved in this sector with their handful fortune. For past a decade it has become one of the significant concern issues from the top of the bureaucrats to the lower income citizen, as many people’s fate depends on this sector. For this reason, development of this sector in every aspect has been demanded. That’s why laws, rules etc. have been imposed for this concern of development, to give a consolidated structure of this system. One of these developments is the introduction of Broking operation and this operation is considerably well regulated by the regulatory authority. Day by day, the brokerage operations are developing by the logic based well executable systems with the help of available concurrent information technologies. A well regulated infrastructure of information flow and operations are the result of the development of this broking operation. Now, one can operate with the exchanges from remote areas without compromising the ethics or hampering one’s interest.
IDLC Securities Limited, one of the leading brokerage institutions of the country achieved significant growth in all areas of business in the year ended, 2010. IDLC began its operation in 2006 as a subsidiary of IDLC Finance Limited in Bangladesh. On that year IDLC Securities Limited obtained brokerage license from both Dhaka and Chittagong Stock Exchange.
The company's has both retail and institutional investors with high standard of servicing to them. Internal business process is efficient that honored it as the top five brokerage house in the country.
1.2 Origin of the Report:
Since practical orientation is an integral part of the MBA degree requirement, I was deputed by the Dept. of Accounting & Information Systems, University of Dhaka to IDLC Securities Limited to take real life exposure of the activities of the organization as a financial institution.
I was assigned in the IDLC Securities Limited and attached with Accounts & Administration Division. Being in the back office it is really a great opportunity to oversee the activities with closer touch.
This report has been originated as the course requirement of the MBA program. I hope the report will give a clear idea about the activities and role of IDLC Securities Limited and the present condition, prospect & future of the capital market.
1.3 Objectives of the Report:
The main objective of the study is to get a definite idea about how brokerage houses operates and what function it does i.e. opening BO account, trading, settlement, accounting procedure etc. Also its presence and contribution in the capital market, prospect of the capital market etc are some other objectives. Furthermore, the orientation is very useful to detect whether the theoretical knowledge matches with real life scenario or not. Though the title " Brokerage Operation in Bangladesh: Inside of IDLC Securities Limited" very lengthy area, the specific objectives are as follows:
1. To know the overall activities of the Brokerage house.
2. To know how BO account is maintained.
3. To learn about the whole trading process of IDLC Securities Limited.
4. To know the decision making process of the organization.
5. To know the present situation & growth of the capital market
6. To know about the probable benefits of derivatives, future & forward market.
1.4 Scope of the Report:
I am very fortunate that I could work in various departments of the organization thereby I gathered knowledge about the overall activities of the company. I have had an opportunity to gather experience by working in the different desks of the branch. The area of concentration of this report is confined in investigating different aspects of the capital market transactions, problems, prospects. The report also covers the functions performed by the brokerage house, rules and regulations related to it, procedure, monitoring, various analysis related to this particular arena etc.
1.5 Methodology of the study:
Analysis has been made on the basis of the objectives mentioned before in the context of " Brokerage Operation in Bangladesh: Inside of IDLC Securities Limited”
The paper will be written on the basis of information collected from primary and secondary sources.
(i) Primary Data: Discussion with the respective organization's officials.
(ii) For the completion of the present study, secondary data has been collected. The main sources of Secondary Data are:
Different Books, Journals, Periodicals, News Papers etc.
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