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"Ups and Downs of Capital Market and Roles of the Regulatory Authority: A Case Study on Dhaka Stock Exchange Limited", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.8, Issue 1, page no.244-261, January-2021, Available :http://www.jetir.org/papers/JETIR2101033.pdf

• Torab Ahmed Khan Chowdhury

Rhythmic volatility is the common phenomena of a capital market and it has a huge role to play in the economic development of a country. An efficient capital market helps to allocate capital to businesses effectively. Bangladesh’s capital market has greatly lost the confidence of its investors due to negative performance in the previous two crucial market falls and the COVID-19 pandemic crisis. Present study will recognize that because of the sudden bubbles of the capital market of Bangladesh in its previous two occasions have lost the investor’s confidence, examine the situation of that time, steps were taken by the regulators and will identify the precautionary measures for the safety in future in the capital market of Bangladesh. The study was descriptive and analytical type. The study was conducted at Dhaka district in Bangladesh. The study was conducted from April 2019 to July 2020. Basically, random sampling method was used in this study. The present study is based on secondary sources of data. Secondary data were collected from different relevant publications, dissertations, books, journal articles, reports and websites etc. The result of the study revealed that most of the investors of Bangladesh are not skilled. The investors have lack of knowledge and lack of experiences in investing in the capital market. Most of the investors use to motivate by the rumors; they don’t want to study the financial statements of the companies where they will invest. In some cases, investors rely on the brokerage house to invest in any companies. From the result it was also found that there were some fraud companies who had no fruitful business history but submitted artificial financial statements and related documents. This type of intentional companies have got the opportunity to come in the capital market with the chance of lack of rigorous scrutinizes by the regulated authorities. Most of the cases that intentional companies showed their business performance for qualifying to able to sell their all shares; then gradually escaped from the market by depriving the general investors. But the irony of fate is that the concerned authorities have failed to stop the gateway or unsuccessful to give punishment or unable to bring back the money of the investors. However, recently present commission of the BSEC is working seriously on these issues. For these reasons capital market of Bangladesh has faced many challenges in its lifetime. From the result it was found that the securities market of Bangladesh was stable before 1996 but not automated and no corporate governance was there. In 1996, there were many bubbles in the capital market, there were many alluring news, false statements, market manipulation, corruptions and illegal interferences were done by the companies’ as well as concern bodies. As a result market was crushed at that time. More specifically, after that capital market has got automation and huge corrective measures have taken by implementing reasonable rules and regulations and the market tried to be behaved properly. To some extent the market became stable before 2010. But in 2010 the growth of the market has shown almost similar behavior as it was in 1996. And there were also many bubbles in the capital market, there were much unrealistic news, misleading statements, manipulation, exploitations and illegal interferences were done by the companies’ authorities as well as the related concern. For cooling the extreme bubble SEC of that time rightly pointed out to increase the supply of profitable government shares but was not possible due to bureaucratic failure and ultimately failed to address the issue at that time. As a result market was once again crushed at the last month of 2010. Many investors lost their investment and turn into bankrupt and many became mad. After the down in 2010, many positive decisions have been taken by the concerned authorities related to capital market. Specifically, in 2020, the recent authority of Bangladesh Securities Exchange Commission has taken significant and very potential initiatives which were needed to change the attitude and the confidence of the investors of Bangladesh capital market. The Bangladesh Securities Exchange Commission is strictly obeying the prevailing rules and regulations regarding capital market. For this reason some directors of publicly traded companies were bound to hold 2% share of their companies’ total share. On the other hand, the companies’ directors who are unable to hold 2% share of their total companies’ share, are going to fail to continue their directorship and would be cancelled side by side same announcement was pronounced for holding 30% share of their respective companies by the directors as a whole which was also a mile stone decision in the history of the capital market of Bangladesh. As a matter of fact, Bangladesh Securities and Exchange Commission has a significant role in bringing back the investor’s confidence in the development of the capital market of Bangladesh.

"Ups and Downs of Capital Market and Roles of the Regulatory Authority: A Case Study on Dhaka Stock Exchange Limited", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.8, Issue 1, page no. pp244-261, January-2021, Available at : http://www.jetir.org/papers/JETIR2101033.pdf