Business Report :
Brokerage firms have been granted an additional nine months to implement non-editable uniform back-office software from panel-listed vendors, aimed at preventing the misappropriation of investors’ funds.
The Bangladesh Securities and Exchange Commission (BSEC) issued a letter on Tuesday, extending the timeline from 1 April to 31 December 2024, following a request from the DSE Brokers Association of Bangladesh.
The back-office software of a brokerage firm is where information on investors’ money, shares, transactions, cash balance, and deposit balance is preserved.
The authorities undertook this initiative following complaints of investors’ fund misuse by stockbrokers.
Tamha Securities, Banco Securities, and Crest Securities are three brokerage houses that have been in the news for embezzling investors’ money through back-office software.
Other brokers on the list of embezzlers include Shah Mohammad Sagir Securities, Dawn Securities, Sylhet Metro City Securities, Trendset Securities, and Moharram Securities Limited.”
In its order, the BSEC stated that the back-office software most brokerage firms use is editable. This makes it easy for unscrupulous brokers to provide misleading information to their clients by editing the information before sending it to them.
Moreover, brokerage firms often collude with software providers to carry out such malfeasance. Additionally, because the audit trail is not saved in the overall system, these wrongdoings generally go unnoticed.
Earlier, the BSEC directed both stock exchanges to formulate guidelines to regulate software vendors and establish a panel comprising these vendors by December of the previous year.
The vendors must provide un-editable back-office software to brokerage houses so that no information can be altered in any way.
Furthermore, brokers were supposed to ensure their use of the un-editable software by 31 March 2024.
