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Monday, April 13, 2009

DSE seeks tougher rules on mutual funds

The Daily Star

Dhaka Stock Exchange will urge the market regulator not to approve any new mutual fund worth below Tk 50 crore to prevent an unusual price hike in the fund's unit prices on debut.

A trend shows the unit prices of a Tk 20 crore new mutual fund have jumped by more than seven times or 700 percent on its trading debut.

By definition, a mutual fund should trade under face value, as there is no net asset value of the fund on the first day.

"The market went volatile because of the mutual fund's size was small, while a higher number of investors flocked to the scrip," DSE President Rakibur Rahman said in a press briefing at the DSE yesterday.

The bigger size of a mutual fund will ensure a larger number of units, he said.

"We think mutual fund managers should disclose net asset value on a fortnightly basis," Rahman said. Presently, the fund managers disclose the net asset value on a monthly basis.

The DSE is also working on fixing a set of recommendations to be placed to the Securities and Exchange Commission to bring some changes to initial public offering (IPO) rules.



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