Unlocking Stock Market Potential: AMarkets – Your Trusted Brokerage

Introduction: Brokerage Houses: Facilitating Investments in the Stock Market

Learn how to open a BO (Beneficiary Owner’s) account on the stock market and get a clear understanding of brokerage firms. Discover the opportunities provided by brokerage services and gain confidence in your ability to navigate the world of investing. This article offers helpful information on opening a BO account and the function of brokerage firms in the stock market for both new and seasoned traders.

AMarkets is a brokerage firm operating in the financial markets since 2007. It has established a significant presence in multiple European and CIS countries, earning recognition as a reputable ECN broker known for its adherence to European standards. While AMarkets primarily caters to professional trading and “Forex trading for beginners,” it is essential for traders to have a comprehensive understanding of brokerage houses and the procedure involved in opening a BO (Beneficiary Owner’s) account in the stock market.

Stock exchanges are home to numerous authorized agents, commonly known as brokerage houses. These institutions, licensed by the Securities and Exchange Commission, play a vital role in the stock market. Acting on behalf of investors, brokerage houses facilitate the sale of shares, collect IPO proceeds, and handle CDBL fees. In many ways, brokerage houses function similarly to banks, assisting investors by opening BO accounts and facilitating transactions in the primary and secondary share markets.

I. BO Account: The Gateway to Stock Market Investment

1. Defining the BO Account (BO) A BO (Beneficiary Owner’s) account is a prerequisite for investing in the Bangladesh stock market or applying for IPOs. This account resembles a bank account and must be opened with a brokerage house. Through the BO account, individuals can become investors in the share market, deposit and withdraw funds, and buy and sell shares. Unlike bank accounts, BO accounts do not require a minimum deposit.

B. Types of BO Accounts

1. General BO Account: Bangladeshi residents and individuals in Bangladesh can open General BO Accounts. These accounts can be categorized into three types: a. Sole Proprietorship BO Account: Investors can open a BO account under their name. b. Jointly Owned BO Account: Two individuals can together open a BO account. c. Corporate BO Account: Investors can open a BO account in the name of their company if desired.
2. NRB BO Account (Non-Resident Bangladeshi): This type of BO account is specifically designed to facilitate Bangladeshi expatriates and foreign nationals to invest in the stock market of Bangladesh.

II. Opening a BO Account: Procedures and Guidelines

1. Selecting a Brokerage House Individuals should consider opening a BO account with a brokerage house in their area or district, preferably close to their locality or workplace.

B. Rules for Opening a BO Account To open a BO account, individuals must meet the following criteria:

• Be at least 18 years of age
• Provide two copies of passport-size photographs
• Submit a copy (scan/photograph) of the applicant’s national identity card or passport and those of the joint applicant and nominee.
• Provide a photo of the nominee.
• Submit a copy of a bank statement or bank check (scan/photograph)
• Pay an opening fee, typically around 500 to 600 rupees
• Note: Some brokerage houses offer online BO account opening services.

III. Managing a BO Account: Depositing Funds and Making Transactions

1. Depositing Funds into a BO Account After opening a BO account, individuals must deposit funds. This can be done by depositing money directly into the BO account or the bank account associated with the brokerage house. Funds can be deposited through various methods such as Bkash, Rocket, cash, or online bank transfers. Proof of deposit, such as a deposit slip or screenshot, should be uploaded on the broker’s website.
2. Minimum Investment Requirement For investments in primary shares or IPOs, a BO account must maintain a minimum balance of Rs. 5,000/=. New investors entering the secondary market must deposit a minimum of Rs. 10,000/= in their BO accounts.
3. Buying and Selling Shares Once funds are deposited in a BO account, investors can engage in buying and selling shares through the following methods:

• Online: Utilizing mobile apps or websites
• Authorized Representatives: Communicating with brokers via phone or in person at the brokerage house.

IV. Understanding the Stock Market and Shares

1. Defining the Stock Market The stock market refers to the marketplace where shares of various public limited companies are bought and sold. Bangladesh’s two leading stock exchanges are the Dhaka Stock Exchange and the Chittagong Stock Exchange. The Securities and Exchange Commission regulates these exchanges.
2. Shares: Ownership and Dividends represent a specific ownership stake in a company. The capital of both private and public limited companies is divided into shares. Shareholders, individuals who purchase shares, are considered owners of the company. Shareholders are entitled to dividends the company declares based on the number of shares owned. The number of shares held determines shareholders’ ownership and dividend payout percentages. Different categories of shareholders in Bangladesh include directors, government entities, institutions, foreign investors, and the general public.

V. Stock Market Indices: Understanding the Market’s Performance

1. Stock Market Indices A stock market index is a statistical measure that tracks changes in share values within the stock market. Indices provide insight into overall market changes, reflecting price fluctuations of selected stocks. Bangladesh’s stock markets have several indices, with the Dhaka Stock Exchange (DSE) comprising three indices and the Chittagong Stock Exchange (CSE) comprising five.
2. Significance of Stock Market Indices Understanding the significance of stock market indices is crucial for investors. The value of each index represents the collective change in share prices. For instance, if the DSEX index increased from 6000 to 6060, it indicates a rise of 60 points or a 1% increase compared to the previous day. As market capitalization grows, the index value rises, providing valuable insights into market performance.

VI. Types of Shares and Stock Market Indexes

1. Types of Shares The two primary types of shares are common and preferred. Only common shares are tradable in Bangladesh. Key distinctions between the two include:

• Common Shares: Offer dividends, voting rights, and potential for capital gains
• Preference Shares: Provide priority dividends and higher debt repayment priority but lack voting rights

B. Understanding DSEX, DSES, and DS30

1. DSEX: The Dhaka Stock Exchange Board Index (DSEX) represents approximately 97% of Bangladesh’s total equity market capitalization. To be listed in the DSEX index, a company’s capital must exceed 100 million rupees. The base value of the DSEX index is 2951.91 (as of January 17, 2008).
2. DSES: The DSES Index, also known as the Shariah Index, is a subset of the DSEX index. It excludes companies involved in activities prohibited by Islamic religious law. This index aims to attract Shariah-based investments.
3. DS30: The DS30 index comprises 30 leading companies and reflects approximately 51% of the total equity market capitalization. Companies in the DS30 index must have capital exceeding 500 million rupees, average daily transactions of at least 5 million rupees over three months, and positive net income in the last 12 months. The base value of the DS30 index is 1000.

Conclusion:

Understanding brokerage houses, opening a BO account, and comprehending the stock market are crucial steps for individuals looking to invest in shares. By following the necessary procedures, investors can confidently navigate the stock market and make informed decisions based on stock market indices and share types.