BSEC Chief Assures Repeal of Mutual Fund, Margin Rules Within Two Months

Published : Thursday, 11 June, 2026 at 6:54 PM Count : 21

The Chairman of the Bangladesh Securities and Exchange Commission (BSEC) has assured investors that the controversial Mutual Fund Rules 2025 and Margin Rules 2025 will be repealed within the next two months, according to leaders of the Bangladesh Capital Market Investors Association (BCMIA).

The assurance was conveyed during a recent courtesy meeting between investor representatives and the newly appointed BSEC Chairman, BCMIA President S.M. Iqbal Hossain said while addressing a seminar at the office of the Capital Market Journalists Forum (CMJF) in Bijoynagar, Dhaka, on Wednesday.

The seminar was attended by Mutual Fund Investors Forum President Zahurul Haque Jewel as special guest, along with representatives of investor organizations, market participants and general investors.

Concerns Over Market Stability

Speakers at the seminar criticized several policy decisions adopted by the previous commission, describing the Mutual Fund Rules 2025 and Margin Rules 2025 as particularly detrimental to the country's capital market.

They argued that repealing the regulations is crucial for restoring investor confidence and ensuring long-term market stability.

Participants expressed serious concerns over recent directives relating to the conversion or liquidation of closed-end mutual funds, warning that such measures could have far-reaching negative consequences for the stock market.

According to investor leaders, closed-end mutual funds currently hold listed equities worth around Tk 7,000 crore and remain one of the largest institutional investor groups in the market. They cautioned that forcing these funds to convert into open-end structures or liquidate their assets could trigger significant selling pressure and destabilize the market.

Fear of Large-Scale Share Sell-Offs

Speakers noted that liquidation of fund assets would require the sale of thousands of crores worth of shares within a short period, potentially causing a sharp decline in market indices and creating panic among retail investors.

They warned that panic-driven selling by individual investors could further intensify the pressure, with total market sell-offs potentially exceeding Tk 20,000 crore.

Several participants emphasized that closed-end mutual funds have historically played a stabilizing role in Bangladesh's capital market. They also alleged that asset management companies have faced excessive scrutiny through investigations and inspections in recent years.

Questioning the rationale behind the proposed measures, they asked why institutions that have long contributed to market stability are now being pushed toward conversion or liquidation.

Open-End Conversion Not the Answer

The speakers further argued that converting closed-end funds into open-end funds would not solve the underlying challenges.

Under an open-end structure, fund managers are required to redeem units upon investors' requests, forcing them to sell portfolio assets and withdraw liquidity from the market. Such a process, they said, would continue to exert selling pressure on listed securities.

Employment Risks Highlighted

Participants also raised concerns about the potential impact on employment within the mutual fund industry.

They said approximately 67 asset management companies operate in the country, directly and indirectly employing thousands of professionals. Any mandatory liquidation or conversion of closed-end funds could significantly reduce business activities and create widespread job insecurity.

Some speakers claimed that layoffs have already occurred in certain asset management companies and warned that further contraction of the industry could increase unemployment and place many families under financial strain.

Allegations of Irregular Recruitment

During the seminar, investor representatives also raised allegations regarding the recruitment of 127 officials during the tenure of former BSEC Chairman Professor Shibli Rubayat-Ul-Islam.

BCMIA President S.M. Iqbal Hossain alleged that some officials recruited through the disputed process are actively advocating for the implementation of the Mutual Fund Rules 2025 and Margin Rules 2025 and are working against the interests of the capital market.

He further claimed that despite BSEC Chairman Masud Khan currently being abroad, certain officials continue efforts to enforce what he described as "black laws."

Iqbal alleged that on June 9, BSEC sent a letter to the Investment Corporation of Bangladesh (ICB), acting as trustee of several mutual funds, urging it to proceed with the liquidation or conversion of existing closed-end mutual funds under the 2025 regulatory framework.

Call for Stakeholder Consultation

The seminar concluded with a call for the suspension, reconsideration or cancellation of directives relating to the liquidation or conversion of closed-end mutual funds.

Speakers urged regulators to engage in meaningful consultations with investors, asset managers, trustees, custodians, market experts and other stakeholders before taking any further action.

They noted that Bangladesh's capital market is already facing a crisis of confidence and a shortage of liquidity. Under such conditions, they warned, putting the nearly three-decade-old mutual fund industry at risk could further undermine efforts to restore investor trust.

Investor leaders stressed that any decision affecting the sector should be reviewed carefully, with due consideration given to market stability and the protection of investors' interests.

FP/MI