Till about two weeks ago, not many in Bangladesh cared for Dhaka Stock Exchange (DSE) and its demutualisation drive, approved in 2013, to separate the ownership from the management run by member brokers.

Today, DSE is at the centre-stage of a raging public debate on perceived attempts by the NSE – which is leading a consortium of Nasdaq and a Bangladeshi entity — to gain control over 25 per cent strategic stake in the Bangladeshi bourse through the backdoor. At BDT (Bangladeshi taka, or Bangladesh’s currency) 15 per share, the NSE quoted substantially lower price than the Chinese consortium of Shanghai and Shenzhen bourses offering BDT 22 per share. Naturally, DSE members favoured the Chinese.

What triggered the debate is a hasty instruction from the Bangladeshi regulator — Bangladesh Security and Exchange Commission (BSEC) — asking the DSE to review its decision with wider perspectives in mind.

The instruction came even before the DSE formally approached the regulator for due approval, and soon after NSE MD and CEO Vikram Limaye called on the BSEC officials, on a “courtesy visit”, on February 11 after closure of the final bids on February 6.

According to latest reports available in Bangladeshi media, DSE members did review their decision but without any change in outcome. In its final recommendation submitted last week, the DSE favoured China’s offer as it yields maximum benefit to the existing shareholders of the exchange.

Public debate

BSEC is yet to approve the recommendation of the DSE board. However, it is a million dollar question if they will be able to upturn DSE’s recommendation in view of the raging public debate and ignoring China’s pressure.

While stake-sale in the DSE is too insignificant a cause to trigger a diplomatic row between India and Bangladesh, the episode may have caused some unnecessary damage to India’s image in Bangladesh. And, that calls for introspection on the part of Indian authorities, if they should be a little more tactful and choosy in upping the ante against China, in the future.

Indian sources as well as some Bangladeshi experts point out in private that China’s open-ended bid is highly overvalued and is merely aimed at ring-fencing Indian competition.

In comparison, the NSE outlined the need for more active participation in market-building than simply throwing money. The NSE asked for the right to sell its stake in the DSE after five years, in a time-bound manner.

Maximising value of investment in the DSE is no easy task. The stock exchange is known for scams and suffers from lack of depth.

Indian sources point out that Nasdaq restricted its participation to the consortium merely as a technology provider. According to them, it indicates the limited prospects of return on investment in the DSE. Assuming this is true, what stopped the NSE and the Indian authorities from resorting to back channel diplomacy to convince the Bangladeshi counterparts to evaluate the tenders in the right spirit? Even if the NSE chief met the Bangladeshi regulator to exchange pleasantries, why did he choose to meet the latter after it became apparent (not official) that the Chinese had promised a higher price?

For historic reasons, many Bangladeshis look at India through the prism of suspicion. Was it necessary to fuel the public perception?

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