The Bangladesh Securities and Exchange Commission (BSEC) has rejected Monarch Holdings Limited's application for a licence of market maker.
Bangladesh T20 cricket captain Shakib Al Hasan is the chairman of Monarch Holdings – a brokerage house listed both at the Dhaka and Chattogram bourses.
The company's application was rejected in a recent BSEC meeting because it failed to submit proper documents, BSEC Chairman Professor Shibli Rubayat Ul Islam told The Business Standard.
Sources at the BSEC said, the commission found Javeed A Matin, director of Monarch Holdings, in a Credit Information Bureau (CIB) report as a loan defaulter. As per the law, loan defaulters are not allowed to be a company's board member.
Javeed A Matin is a controversial businessman who was fined by the United States Securities and Exchange Commission for manipulating shares.
On 8 May, the company applied for the licence to the Dhaka Stock Exchange (DSE), which sent the application after initial verification to the BSEC for final approval.
Market makers help keep the market functioning, meaning if someone wants to sell a bond, they are there to buy it. Similarly, if someone wants to buy a stock, they are there to have that stock available to sell to him.
Market makers are useful because they are always ready to buy and sell as long as the investor is willing to pay a specific price.
Be Rich Ltd, a stock broker of Chittagong Stock Exchange, got approval as the country's first market maker for the stock market in 2021. Subsequently, Green Delta Securities got approval as the second market maker.
According to the BSEC rules, a registered market maker shall conduct market operations with utmost integrity, honesty, skill and devotion. A firm will get the approval for one year and all their accounts will be preserved for ten years.
Authorised market makers shall take necessary steps to ensure liquidity and fair pricing of securities or shares.
Recently, Shakib and his Monarch Holdings made the headlines for reported stock manipulation.