SEC Cancels Two Merchant Banks Licences

The Securities and Exchange Commission (SEC) Thursday cancelled licences of two merchant banks as they remained inactive after getting approval three years back, a spokesman of the SEC told reporters.

The two merchant banks are the First Securities Services Ltd and the Raspit Securities and Management Limited.

The commission also directed three other merchant banks-Pangaea Partners (BD) Ltd, Prime Securities and Financial Services Ltd and Mercantile Securities Ltd-to begin their operation by December 31 next in accordance with merchant banker licensing rules.

"The licences of the three merchant banks will be cancelled on January 1 next year if they fail to start their operation by the deadline set by the commission,' SEC executive director Farhad Ahmed told reporters.

The steps have been taken in order to make merchant banks active, he said.

First Securities Services was licensed to act as issue manager while Raspit Securities and Management as full-fledged merchant bank, which was allowed to perform as issue and portfolio manager and underwriter for clients.

Of the three, Pangaea Partners (BD) and Prime Securities and Financial Services are issue managers, while Mercantile Securities is a full-fledged merchant bank.

Under the SEC merchant banker licensing rules, a merchant bank working only as issue manager has to submit at least a documented proposal for an initial public offering of a company in a year, while a merchant bank licensed to act only as portfolio manager has to form at least five new portfolios of its clients besides its own, and a merchant bank working as a full-fledged merchant bank has to manage one IPO, to be underwriter of two issues and form five new portfolios of its clients besides its own in a calendar year.

On June 17 this year, the SEC sent hearing notices to the companies in this context, but the notices were returned to the commission undelivered, Farhad said.

So far, a total of 31 companies received merchant banking licences from the commission.

Only a few of them are now active. Most of them have shown unsatisfactory performance in the capital market, with a number of them even appeared reluctant to start operations, SEC sources said.

Of them, a total of 29 companies received merchant banking licences from the commission between January 1998 and April 2002. Citigroup Global Markets Bangladesh Private Ltd obtained the license last year and Trust Bank this year.

Earlier the SEC on September 7, 2006 cancelled the merchant banking licence of Equity Valuation Research and Distribution Ltd.

source- thefinancialexpress