Dhaka Stock Exchange (DSE) is introducing the Over the Counter Trading (OTC) market today to segregate companies

with weak fundamentals from its main trading frame. According to Investopedia, an online dictionary, the phrase 'Over the Counter' refers to stocks that trade via a dealer network as opposed to on a centralised exchange. It also refers to debt securities and other financial instruments such as derivatives, which are traded through a dealer network. In general, the reason for which a stock is traded over-thecounter is usually because the company is small, making it unable to meet exchange listing requirements. Also known as 'unlisted stock', these securities are traded by brokerdealers who negotiate directly with one another over computer networks and by phone. Instruments such as bonds do not trade on a formal exchange and are, therefore, also considered OTC securities. The OTC at Dhaka bourse will initially be a separate trading floor for the buyers and sellers of the companies that will be removed from main board for some valid reasons. The reasons may include non-performance and/or weak performance of the companies and noncompliance of listing rules, DSE source said. Most of the Z-category companies will be shifted to the OTC market soon, the source said. Z-category, a section in the DSE main trading frame, includes over 90 listed companies with weak performance. The Securities and Exchange Commission (SEC) earlier suggested the stock exchange authorities to introduce the OTC to separate weak companies from the good ones. The separation will bring in more stability to price index as the index will only reflect the price movement of companies with good performance and fundamentals, the DSE sources said. 6 sep 09 The Dhaka Stock Exchange (DSE) has launched the over-thecounter (OTC) market-a separate trading floor-- to facilitate

trading of the non-listed and de-listed companies. Shares of companies that have been de-listed from the premier bourse will be placed on the OTC market in the first phase. In the next phase, shares of non-performing and non-operational companies that will be removed from the main board will be traded on the new OTC floor. "It is a milestone for the stock market," Securities and Exchange Commission chairman Md Ziaul Haque Khondker said while inaugurating the OTC market at the DSE main building Sunday. "It is better late than never," he said as the DSE introduced the DSE after long time. Binning doubt over the OTC market's successes, he said, "I believe, transparency and efficiency will yield positive results." He said introduction of OTC market will increase integration between Dhaka market and other international capital markets, most of which have separate OTC market. SEC member Mansur Alam said, "The OTC market is just like trading of the paperless shares which will take at least 16 days to settle." "The SEC will introduce relevant regulations governing the OTC market in future," he said. About those Z-category companies numbering 44 whose share trading remained suspended over the last couple of months, Alam said, "The SEC will take decision about them soon." Referring to the OTC market of Chittagong Stock Exchange, where no trading was held since its inception in 2004, DSE President Rakibur Rahman said the Dhaka OTC market will not be like CSE. DSE senior vice president Saiful Islam was also present at the function.

DSE acting chief executive officer Satipati Moitra said, "Only unlisted or de-listed companies as designated by the SEC can apply for listing at OTC." As per SEC directive issued today, all the de-listed companies from the secondary market will be listed with the OTC market, he added.