The notice said if the rules are implemented by the BSEC, the DBA will challenge the propriety of the rules

DSE Brokers Association (DBA) has served a legal notice to the board of directors and management of the Dhaka Stock Exchange (DSE) for giving "no objection" to the draft Trec Rules, framed by the market regulator ignoring the interest of DSE members and investors.

DBA is the platform of trading right entitlement certificate (Trec) holders of the stock exchange.

Lawyer Ahsanul Karim on behalf of DBA President Sharif Anwar Hossain served the legal notice on Sunday.

The notice asked the DSE to send a "note of protest" to the Bangladesh Securities and Exchange Commission (BSEC) on the draft rules within seven days, and in the event of the failure to do so, the DSE members as well as strategic investors would hold an extraordinary general meeting of the bourse to remove all of its directors.

The notice also said that if the rules are implemented by the BSEC, the DBA will challenge the propriety of the rules.

The legal notice, served to all DSE directors, managing director, and company secretary, said that giving no objection to the draft rules is indeed in conflict with standing as directors of DSE.

Earlier on March 4, the BSEC sought opinion from DSE over the draft Trec rules, but the bourse gave no objection to the rules.

On March 25, the BSEC sought public opinion over the draft rules regarding the issuance of brokerage licence, saying that if anyone has Tk3 crore in paid-up capital and pays Tk6 lakh to the stock exchanges as fees would be eligible for the licence.

The stock exchanges will get Tk1 lakh as licence fee and Tk5 lakh as registration fee for issuing a Trec licence which triggered criticism among the DSE members.

The legal notice also said BSEC has no authority whatsoever to frame any such rules, while the content of the draft rules setting out qualification and fixing fees for new Trec applicants is simply an act of catastrophe.

There are 242 Trec holders at the DSE and some of them continue to struggle in running their business.

The BSEC published the draft of Trec Rules, 2020 on March 25 and asked for stakeholders' opinion within April 15.

No director of the applicant company can be a convict in criminal cases, or a loan defaulter, or a director of any other Trec holder company, it proposes.

Also, if any shareholder of the interested company has a collective investment scheme, it will not be eligible for a Trec licence.

A DSE member said that the demutualization act dictated the rule, but there should be some tougher entry criteria for non-members to be in the brokerage business.