Bangladesh Promises Capital Market Overhaul in 90 Days, From Faster IPOs to a Derivatives Market

A Government Adviser Promises Results Within the Quarter

Tanvir Shahriar Ghani, the prime minister's special assistant for investment and capital market affairs, told reporters on September 16 that Bangladeshis should expect visible, positive changes in the country's battered stock market within two to three months. That is a bold timeline for a market that has spent most of the past year lurching between brief rallies and brutal selloffs, most recently a five session slide that erased roughly Tk6,400 crore in value before regulators summoned the top thirty brokerage houses for emergency talks. Ghani's pitch was not that the market's problems are small, but that the government finally has the right people and the right plan in place to fix them.

Central to his argument is that Bangladesh's market remains dangerously dependent on retail investors, a structure that makes it prone to exactly the kind of panic selling that has repeatedly hammered the Dhaka Stock Exchange this year. A single proposed margin lending rule triggered a sharp sell off in late July, and foreign investors have been steadily pulling money out of blue chip names like City Bank, BRAC Bank, Prime Bank and Square Pharmaceuticals for most of the current fiscal year. Ghani's answer is to widen the investor base itself, drawing in more foreign institutional money and building up domestic institutional participation so the market no longer swings wildly on the mood of individual traders.

The Reform Checklist

The specific commitments Ghani laid out amount to one of the more detailed capital market reform agendas floated in Bangladesh in recent years. He pointed to cutting IPO approval times from the current eighteen to twenty four months down to just two to three months, a change that would bring Bangladesh's listing process closer in line with regional peers and, in theory, make it far more attractive for growing companies to raise money publicly rather than relying entirely on bank loans. He also described a three year plan to convert negative equity into positive equity across affected sectors, an implicit acknowledgment that a meaningful slice of Dhaka's listed companies are trading below book value or carrying balance sheet damage that needs to be worked through rather than papered over.

Beyond fixing what already exists, Ghani talked about building products the market largely lacks today: a derivatives market, for instance, and a commodity exchange, both of which would give investors tools to hedge risk rather than simply buying and holding through volatility. He also flagged a structural mismatch that bankers themselves have long complained about, namely that commercial banks in Bangladesh often end up financing long term infrastructure projects with short term deposits, a maturity gap that adds risk to the banking system. Directing more of that long term financing toward capital markets instead, through bonds and other instruments, is meant to relieve some of that pressure while giving the stock and debt markets more depth. Rounding out the list, Ghani said the government is working to remove legal obstacles in tax and banking regulation that currently discourage investment, though he offered few specifics on which rules are in the government's sights.

Why Bangladesh's Market Looks So Thin Next to Its Neighbours

The scale of the challenge becomes clearer when Bangladesh's market activity is placed next to other economies of similar size. BSEC chairman Masud Khan, speaking at a separate event just days earlier on September 12, pointed to Bangladesh's daily trading to market capitalisation ratio of roughly 0.14 percent, meaningfully lower than Vietnam's 0.21 percent, Pakistan's 0.19 percent, India's 0.26 percent or Thailand's 0.23 percent. In plain terms, money simply moves through Dhaka's market at a fraction of the pace it does in comparable economies, a symptom of both thin institutional participation and the retail heavy trading base Ghani was also describing.

Market	Daily trading to market capitalisation ratio
Bangladesh	0.14%
Pakistan	0.19%
Thailand	0.23%
Vietnam	0.21%
India	0.26%

Khan's own prescription overlapped heavily with Ghani's, which suggests at least some coordination between the BSEC and the wider government on where reform energy should go. He argued that Bangladesh needs more quality companies willing to list rather than lean on bank credit, warning bluntly that banks taking deposits for one year and lending for eight years is highly risky, a direct echo of the maturity mismatch problem Ghani raised days later. Khan's own reform list included simplifying the process of bringing companies to market, exploring new IPO and direct listing options, and shifting toward international style book building mechanisms that are meant to produce more realistic share pricing than Bangladesh's traditional fixed price method. IDLC chairman Kazi Mahmood Sattar, speaking at the same event, pushed for expanding bond markets specifically to serve the fifteen to twenty year financing horizons that major infrastructure projects need and that neither bank deposits nor short dated instruments can comfortably provide.

The Rally That Gave the Promises a Tailwind

Ghani's comments landed the same week the market itself was staging a modest recovery. The DSEX index rose 21 points to close at 5,494 on September 16, adding to a 93 point jump the previous session, as Moody's decision to revise Bangladesh's sovereign outlook to stable from negative gave traders another reason for optimism alongside assurances about resolving the country's industrial gas crunch. Turnover climbed 10 percent to Tk556 crore, with textile shares accounting for over a quarter of the day's trading. That is a helpful backdrop for a reform pitch, since it is far easier to sell a multi year overhaul plan to a market that is already recovering than to one still in freefall. It also carries risk for Ghani's credibility: if the rally proves as short lived as several others this year have, skepticism about whether the reform promises will actually materialise is likely to deepen rather than fade.

A Familiar Promise, a Newer Team

None of this is the first time officials have promised to fix Bangladesh's capital market. What is somewhat different this time, according to Ghani, is the composition of the regulatory leadership itself, which he described as an efficient team now in place at BSEC following recent changes at the top of the commission. Whether a new roster of officials can succeed where predecessors have struggled is an open question, and one that history offers reasons for caution about. Bangladesh's capital market has weathered multiple reform pushes over the past decade, from IPO rule rewrites to earlier BSEC leadership changes, without fully closing the gap with regional peers on trading depth, institutional participation or foreign investor confidence.

What has changed concretely, at least on paper, is the specificity of the current commitments. Cutting IPO approval time by a factor of roughly eight, from up to two years down to a few months, is a measurable target that either happens or does not, unlike vaguer pledges to improve investor confidence. The same is true of the three year negative equity conversion plan, which gives markets a fixed horizon against which to judge progress. That specificity cuts both ways: it makes the promises easier to hold the government accountable to, but it also means missing the timeline will be harder to explain away as normal market volatility.

What Would Actually Move the Needle

Market participants and officials seem to agree on the diagnosis even where they differ on emphasis. A market too dependent on retail money panics easily. A banking system asked to fund decade long projects with short term deposits builds up hidden risk. A listing process that takes up to two years discourages exactly the kind of growing, well capitalised companies that would deepen the market and improve its resilience. Fixing any one of these problems in isolation would help only modestly. Fixing all of them within the two to three month window Ghani described would be a genuinely significant achievement for a market that has spent much of 2026 lurching from one shock to the next, energy shortages, foreign investor exits, panic selling episodes, and now a fragile, Moody's assisted rebound. Investors watching Dhaka's exchange over the coming quarter will be looking less at whether officials keep making these promises, and more at whether IPO approval times, foreign institutional inflows and trading volumes actually start moving in the direction the government has now committed itself to on the record.