List of Registered Merchant Banks in Bangladesh:

Sl No.	Name of the Merchant Banks	Authorized Functions
1.	Industrial Development Leasing Company of Bangladesh Ltd.	Full-fledged MB
2.	Uttara Finance and Investment Limited	DO
3.	Banco Trans World (Bangladesh) Limited	DO
4.	Fidelity Assets and Securities Company Ltd.	DO
5.	N D B Capital Ltd.	DO
6.	Bay Leasing and Investment Limited	DO
7.	Swadesh Investment Management Limited	DO
8.	LankaBangla Finance Limited	DO
9.	Grameen Capital Management Limited	DO
10.	South Asia Capital Ltd.	DO
11.	Prime Finance & Investment Ltd.	DO
12.	Mercantile Securities Limited	DO
13.	GSP Finance Company (Bangladesh) Ltd.	DO
14.	Bangladesh Mutual Securities Ltd.	DO
15.	BRAC EPL Investment Ltd.	DO
16.	Prime Bank Limited	DO
17.	Arab Bangladesh Bank Ltd.	DO
18.	EC Securities Ltd.	DO
19.	ICB Capital Management Ltd.	DO
20.	Export Import Bank of Bangladesh Ltd.	DO
21.	Union Capital Limited	DO
22.	AAA Consultants & Financial Advisers Ltd	DO
23.	Alliance Financial Services Ltd.	DO
24.	Business and Management Co. Ltd.	Only Portfolio Manager
25.	Citigroup Global Markets Bangladesh Private Limited	Full-fledged MB
26.	Trust Bank Ltd.	DO
27.	Janata Bank Limited	DO
28.	Sonali Bank Limited	DO
29.	Agrani Bank Limited	DO
30.	Southeast Bank Ltd.	DO
31.	Standard Bank Ltd.	DO
32.	Banco Finance & Investment Limited
33.	Lanka Bangla Investment Ltd.	DO
34.	Race Portfolio and Issue Management Limited	DO
35.	Royal Green Capital Market Ltd.	DO
36.	NBL Capital and Equity Management Limited	DO

Source: http://www.secbd.org/addressmerchant.htm

Merchant Banking Operations in Bangladesh:

Although in the U.S., merchant banks offer a wide range of activities, including portfolio management, credit syndication, acceptance credit, counsel on mergers and acquisitions, insurance, etc. in case of our country, these services may differ. In Bangladesh, a merchant bank can perform multiple operations including underwriting, issue management, portfolio management, merger & acquisition etc. The merchant banking activities were largely fostered by two distinct developments: Merger &acquisition activities and increased demand for venture capital.

1. Underwriting:

Underwriting operation is one of the important functions of a merchant banker by which it can increases the supply of stock/shares and debentures in the market. It is an arrangement whereby the underwriter undertakes to subscribe the unsubscribed portion of shares/debentures offered by any public limited company. This encourages the prospective issuers to offer shares/debentures to the public for subscription and they can raise funds from the public.

One or more investment banking firms may underwrite public offerings. The underwriters have the responsibility of pricing new shares and selling them to investors. The company pays the underwriters a fee. Underwriter also provides advice to a company issuing securities or to an issue manager. Before granting authority to17 non-bank financial institutions in 1997 to conduct merchant banking business in Bangladesh under the Securities and Exchange (Merchant Bankers and Portfolio Manager) Regulations 1995, specialized financial institutions, and the nationalized commercial banks and insurance companies were the key underwriters in the country's securities market.

2. Issue Management:

Issue Management function of merchant Banking helps capital market to increase the supply of securities. Being a Issue Manager these FIs provide assistance to the Private Limited Companies intended to be converted into Public Limited Companies by way of obtaining necessary permission from the relevant authorities, preparing prospectus for public issue of shares and debentures, involving itself in the collection of application money, scrutiny of applications, arranging for lottery relating to allotment, if required, allotment of shares and debentures, refund of application money etc.

3. Portfolio Investment Management Services:

Portfolio means a collection of investments owned by an investor, an institution or a mutual fund and portfolio manager means the entity responsible for investing a mutual fund's assets, mapping out its investment strategy and managing day-to-day securities trading. Portfolio management is the process of building, managing and assessing an inventory of company products and projects.´6 One of the most important functions of merchant banking is to provide Portfolio Management service to the customer. Basically, Portfolio Management Services program has four different wings to provide portfolio investment management services.

The SEC allowed banks to launch merchant banking operation through opening of separate wing mainly to deal in portfolio investment on behalf of clients' account in order to channel pool of investors' fund into the stock market in an organised manner.

4. Merger and Acquisition:

The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. Merchant banking helps to negotiate companies in this case.

Other functions that differ from FIs to FIs are Factoring, Asset Securitization, OTC Market, Capital Re-Structuring etc. In addition these FIs can also perform the activities of:

Ø Project counseling

Ø Lending to stock investors

Ø Pre-Investment Studies, etc

Source: http://www.scribd.com/doc/

Laws and Regulations:

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 offer of a company, 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 under writer of two issues and form five new portfolios of its clients besides its own in a calendar year. A full-fledged merchant bank has to perform at least two operations among the three including managing portfolio in a calendar year.

Customers of Merchant banking:

In our country, the customers of merchant banking are as follows in general:

1. Any Bangladeshi over 18 years of age

2. Any Corporate body (ies)

3. NRB (s) through NITA Account

The Roles of Merchant Banking in Bangladesh:

If FIs get the license, apart from merchant banking, these will be able to ensure a huge liquidity supply to the stock market. The capital market has been in a liquidity crisis since the introduction of direct listing rules in 2006, as five state-owned enterprises and two privately-run companies raised thousands of crores of taka from the market, according to experts. To face such a crisis, more merchant bankers should be allowed to operate in the market, said an expert.

The necessity of issuing merchant banking license by the Securities and Exchange Commission (SEC) is also seen by some experts as an option to lessen the alleged dominance of the existing merchant banks in the stock market. These will also be very helpful for the investors and firms.

Conclusion:

Merchant banks can contribute greatly for the development of more authenticated and structured capital market and can also help to form a more stable economy. The report has been focused to present the important issues of merchant banking sector of Bangladesh within the boundary of three merchant bankers. It has not been possible to present all the factors along with problems and prospects within this limited time frame and it needs more expertise to analyze the real scenario. It may not showcase the proper scenario of total merchant banking conditions. The findings may get biased by the interviewer information compared to the real scenario of market. It was very difficult to give recommendations depending on three merchant banks. In spite of these reasons, dedicated efforts are given to prepare the report, but some mistakes can occur, which are unintentional due to lack of knowledge on certain areas and also because of time limitations.

Source: http://www.scribd.com/doc/

Merchant Banking in Bangladesh

Merchant banks were allowed to operate with the hope of playing a meaningful role in salvaging the country's limping stock market, by generating fresh funds, following the 1996 stock market crash. So far, a total of 31 companies received merchant banking licenses from the Securities and Exchange Commission. The registered merchant banks are: Janata Bank Limited, BRAC Bank Limited, City Bank Limited, Premier Bank Limited, Mutual Trust Bank Limited, Industrial Development Leasing Company of Bangladesh Ltd, Uttara Finance and Investment Limited, Banco Trans World (Bangladesh) Limited, Fidelity Assets and Securities Company Ltd., N DB Capital Ltd., Bay Leasing and Investment Limited, Alliance Financial Services Ltd. Business and Management Co. Ltd., Swadesh Investment Management Limited, LankaBangla Finance Limited, Grameen Capital Management Limited, South Asia Capital Ltd., Prime Finance &Investment Ltd., EC Securities Ltd., Mercantile Securities Limited, GSP Finance Company (Bangladesh) Ltd., Bangladesh Mutual Securities Ltd., BRAC EPL Investment Ltd, Prime Bank Limited, Arab Bangladesh Bank Ltd., ICB Capital Management Ltd., Export Import Bank of Bangladesh Ltd.(EXIM Bank), Union Capital Limited , AAA Consultants and Financial Advisers, Citigroup Global Markets Bangladesh Private Limited, Trust Bank Ltd, Southeast Bank Ltd, Standard Bank Ltd, Sonali Bank Limited and Agrani Bank Limited.

Of them, a total of 29 companies received merchant banking licenses from the commission between January 1998 and April 2002. The Citigroup Global Markets Bangladesh Private obtained the license in the year of 2007 and the Trust Bank in the year of 2008. Six more FIs are going to be approved by the SEC.

The SEC on September 7, 2008 cancelled the merchant banking license of the Equity Valuation Research and Distribution Ltd. The Securities and Exchange Commission on October, 2008 cancelled merchant banking licenses of the First Securities Services Ltd and the Raspit Securities and Management Limited with immediate effect since they remained inactive for years together. The First Securities Services was given license to act as issue manager while the Raspit Securities and Management as full-fledged merchant bank, which was allowed to perform as issue and portfolio manager as well as underwriter for clients. In the year of 2009, of the then 28 merchant banks, 23 had full-fledged Merchant banking license, while four had only issue management license and one had only portfolio management license. The central bank of Bangladesh asked the commercial banks to run their merchant banking business through separately formed subsidiary companies, officials and bankers. Under those new regulations, the banks had to convert their existing merchant banking wing or department into a separate subsidiary company by January31, 2010.It helped to ensure transparency of the merchant banking business.

Recently, securities regulators gave its go-ahead to six more financial institutions (FIs) to operate merchant banking. Because, analysts questioned their expertise and financial base. The Securities and Exchange Commission (SEC) also approved rights offer of Bay Leasing and Investment Ltd. The six financial institutions are Jamuna Bank, Mutual Trust Bank Ltd, The City Bank, Summit Group's Cosmopolitan Traders Private Ltd, Green Delta Insurance and Alpha Capital Management Ltd, a unit of Progressive Life Insurance.

According to the SEC officials, the approval will bring the total number of merchant banking at 37. By giving nod to the six FIs to operate as merchant banks, the SEC has increased maximum limit of the merchant banking operation in the stock market to 50 from 35. But, although 31 merchant banks are operating, only a few (only some) are active while the performance of the rest is "far from being satisfactory." The merchant banks should focus on forming their own portfolios in making the market sustainable; an analyst saw no strong case for the SEC motive, saying it would be of no use unless the companies have professionalism and strong financial base.

So far, the commission has scrapped six licenses of merchant banks including First Securities Services Ltd, Prime Securities and Financial Services Ltd, and Mercantile Securities Ltd.

To register as a merchant banker, SEC asks some requirements as below:

Issue Manager	At least 1 (one) proposal for public issue be submitted to the Commission in each calendar year
Portfolio Manager	In addition to own portfolio, at least 5(five) new portfolio accounts be opened in each calendar year
Merchant Banker	1 (one) issue management, 2 (two) underwriting, 5(five) new portfolio accounts be opened in each calendar year

Besides these, merchant bankers need a pre-condition of capital of TK 100 million for the registration of full-fledged merchant banker. Tk 10 million of capital is needed of a company is registered for issue management and underwriting or portfolio management only. For issue management, it is needed 2.5 million only.

Merchant banking & BO account opening process in Bangladesh

Executive Summary

BO Account stands for Beneficiary Owners Account. It’s task is the maintain of the account holder’s buy/sale with the brokerage firms. Account holder have to agree to pay such fees, charges and deposits to the CDBL Participant, as may be mutually agreed upon, for the purpose of opening and maintaining the account, for carrying out the instructions and for rendering such other services as are incidental or consequential to the holder’s holding securities in and transacting through the said depository account with the CDBL Participant. Have to agree to be bound by The Depositories Act, 1999, Depositories Regulations, 2000, The Depository (User) Regulations 2003, and abide by the Bye Laws and Operating Instructions issued from time to time by CDBL. There are some simple tasks to open a BO account for the Bangladeshi people & have a good chance for the NRB. The NRB can invest in Bangladeshi share market as a percentage of 10% of whole stocks, shares and others existing securities.

A merchant bank is a financial institution which is primarily engaged in offering financial services and provides advice to corporations and to wealthy individuals. The term can also be used to describe the private equity activities of banking.

Merchant banks were allowed to operate with the hope of playing a meaningful role in salvaging the country's limping stock market, by generating fresh funds, following the 1996 stock market crash. So far, a total of 31 companies received merchant banking licenses from the Securities and Exchange Commission.

The tasks of a merchant bank are, underwriting, issue management, Portfolio Investment Management Services, Merger and Acquisition etc.

Introduction:

A merchant bank is a financial institution which provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms they lend to.

Today, according to the US Federal Deposit Insurance Corporation (acronym FDIC), "the term merchant banking is generally understood to mean negotiated private equity investment by financial institutions in the unregistered securities of either privately or publicly held companies." Both commercial banks and investment banks may engage in merchant banking activities. Historically, merchant banks' original purpose was to facilitate and/or finance production and trade of commodities, hence the name "merchant". Few banks today restrict their activities to such a narrow scope.

Objective of the study:

As finance major BBA holder the primary objective of the study is to identify and discus about the Merchant banking & BO account opening process in Bangladesh Following specific objectives:

1. Advantages & disadvantages of Merchant banking.

2. To know how the capital & money markets are moving.

3. How they operate the whole activity

4. What are the procedures of opening BO account?

5. What are the procedures for NRB?

6. The terms & conditions to open a BO account.

7. To know about merchant banking & the history of merchant banking

8. Merchant banking operations in Bangladesh

9. And to know the roles of merchant banking in Bangladesh.

Methodology of the Study:

This is basically a descriptive research by nature and is prepared on the basis of secondary data.

The sources of these secondary data are, different web sites regarding the related issues.

Limitations of the Study:

Despite of the level best effort of the researchers, this article is not fully free of certain obvious limitations. The basic limitation of this article is its sole dependence on secondary data. Secondly, the sources of secondary data were very limited web page. Relevant data is not available regarding this field. For this reason the accuracy of this report depends on the accuracy of the information furnished by the secondary sources.

Introduction

The Investor hereby referred to as the Beneficiary Owner (BO), desirous of availing the services of the depository has to open an account, through designated Depository Participants of CDBL. A BO category and a BO type distinguish each BO account from others. BO category indicates that the account is either a Regular, Principal, Omnibus or Clearing account. BO type indicates whether the BO account is for an Individual or a Joint holder or a Company.

What Is BO Account?

BO Account stands for Beneficiary Owners Account. This is the account that holds you shares like an inbox holding all you emails.

All share from new IPO’s and most of secondary market shares are in electronic form and a BO account, owned by the investor, hold the electronic shares.

All NRB are requested to open a BO account through any one of the Brokerage houses of DSE by filling required forms and submitting required document.

The persons who are eligible for BO Account

1. All Bangladeshi nationals who are free from any restriction of the Government are eligible to open a regular BO account. .

2. All Bangladeshi nationals (Bangladeshi passport holders) who are working/living abroad can open NITA or FC Account. Foreign passport holders who are originally from Bangladesh are also eligible to open an account.

Types of BO account

· Regular BO Account

· Joint BO Account

· NRB BO Account

· Margin account

· Trading account

Terms and conditions from Central Depository Bangladesh Limited (CDBL) to open a BO account.

Form as a token of acceptance of the terms and conditions set out bellow.

1. The account holder has to agree to be bound by The Depositories Act, 1999, Depositories Regulations, 2000, The Depository (User) Regulations 2003, and abide by the Bye Laws and Operating Instructions issued from time to time by CDBL.

2. CDBL shall allocate a unique identification number to (Account Holder BO ID) for the CDBL Participant to maintain a separate Account for account holder, unless the CDBL Participant to keep the securities in an Omnibus

3. The account holder have to agree to pay such fees, charges and deposits to the CDBL Participant, as may be mutually agreed upon, for the purpose of opening and maintaining the account, for carrying out the instructions and for rendering such other services as are incidental or consequential to the holder’s holding securities in and transacting through the said depository account with the CDBL Participant.

4. The account holder shall be responsible for: (a) The veracity of all statements and particulars set out in the account opening form, supporting or accompanying documents. (b) The authenticity and genuineness of all certificates and/or documents submitted to the CDBL Participant along with or in support of the account opening form or subsequently for dematerialization; (c) Title to the securities submitted to the CDBL Participant from time to time for dematerialization; (d) Ensuring at all times that the securities to the credit of my/our account are sufficient to meet the instructions issued to the CDBL Participant for effecting any transaction / transfer; (e) Informing the CDBL Participant at the earliest of any changes in holder’s account particulars such as address, bank details, status, authorizations, mandates, nomination, signature, etc.;

5. The account holder shall notify the CDBL Participant of any change in the particulars set out in the application form submitted to the CDBL Participant at the time of opening the account.

6. Where account holder have executed a BO Account Nomination Form a) In the event of his/her death, the nominee shall receive/draw the securities held in my/our account b) In the event, the nominee so authorized remains a minor at the time of his/her death, the legal guardian is authorized to receive/draw the securities held in my/our account. c) The nominee so authorized, shall be entitled to all my/our account to the exclusion of all other persons.

7. The account holder may at any time call upon the CDBL Participant to close his/her account with the CDBL Participant provided no instructions remain pending or unexecuted and no fees or charges remain payable by me/us to the CDBL Participant. In such event he/she may close account by executing the Account Closing Form if no balances are standing to his credit in the account. In case any balances of securities exist in the account the account may be closed by the account holder in one of the following ways:

(a) By dematerialization of all existing balances in his account;

(b) By transfer of all existing balances in his account to one or more of his other account(s) held with any other CDBL Participant(s);

(c) By dematerialization of a part of the existing balances in the account and by transferring the rest to one or more of his/her other account(s) with any other CDBL Participant(s);

8. CDBL Participant covenants that it shall

a) Act only on the instructions or mandate of the Account Holder or that of such person(s) as may have been duly authorized by the Account Holder in that behalf.

b) Not effect any debit or credit to and from the account of the Account Holder without appropriate instructions from the

Account Holder.

c) Maintain adequate audit trail of the execution of the instructions of the Account Holder.

d) Not honor or act upon any instructions for affecting any debit to the account of the Account Holder in respect of any securities unless:

(i) Such instructions are issued by the Account Holder under his signature or that of his/its constituted attorney duly authorized in that behalf;

(ii) The CDBL Participant is satisfied that the signature of the Account Holder under which instructions are issued matches with the specimen of the Account Holder or his / its constituted attorney available on the records of the CDBL Participant;

(iii) The balance of clear securities available in the Account Holder’s account is sufficient to honor the Account Holder’s instructions.

e) furnish to the Account Holder a statement of account at the end of every month if there has been even a single entry or transaction during that month, and in any event once at the end of each financial year. The CDBL participant shall furnish such statements at such shorter periods as may be required by the Account Holder on payment of such charges by the Account Holder as may be specified by the CDBL Participant. The Account Holder shall scrutinize every statement of account received from the CDBL Participant for the accuracy and veracity thereof and shall promptly bring to the notice of the CDBL Participant any mistakes, inaccuracies or discrepancies in such statements.

f) promptly attend to all grievances / complaints of the Account Holder and shall resolve all such grievances /complaints as it relate to matters exclusively within the domain of the CDBL Participant within one month of the same being brought to the notice of the CDBL Participant and shall forthwith forward to and follow up with CDBL all other grievances / complaints of the Account Holder on the same being brought to the notice of the CDBL Participant and shall Endeavour to resolve the same at the earliest.

9. The CDBL Participant shall be entitled to terminate the account relationship in the event of the Account Holder:

(a) Failing to pay the fees or charges as may be mutually agreed upon within a period of one month from the date of demand made in that behalf;

(b) Submitting for dematerialization any certificates or other documents of title which are forged, fabricated, counterfeit or stolen or have been obtained by forgery or the transfer whereof is restrained or prohibited by any direction, order or decree of any court or the Securities and Exchange Commission;

(c) Commits or participates in any fraud or other act of moral turpitude in his / its dealings with the CDBL Participant;

http://www.cdbl.com.bd/pdf/agreement.pdf