In the previous post, we covered what a stock market is and why it exists. Now let us get specific. If you are going to invest in Bangladesh, you need to understand the Dhaka Stock Exchange — how it is organized, who keeps it in check, and what its numbers actually mean.
A Brief History
The Dhaka Stock Exchange was established in 1954, just a few years after the founding of East Pakistan. Originally called the East Pakistan Stock Exchange Association, it operated with a handful of listed companies. After independence in 1971, trading resumed in 1976 and has grown steadily since.
Today, the DSE lists over 400 companies with a combined market capitalization of several trillion taka. It is by far the larger of Bangladesh’s two stock exchanges — the other being the Chittagong Stock Exchange (CSE), which lists many of the same companies but handles significantly less trading volume.
Who Regulates the Market?
The Bangladesh Securities and Exchange Commission (BSEC) is the government authority that oversees the entire capital market. Established under the Securities and Exchange Commission Act 1993, BSEC’s responsibilities include:
- Licensing brokers and dealers — You cannot trade on the DSE without going through a BSEC-licensed broker.
- Approving IPOs — Every company that wants to go public must get BSEC approval.
- Enforcing rules — Insider trading, market manipulation, and fraud are punishable offenses.
- Protecting investors — BSEC sets margin requirements, circuit breakers, and disclosure standards.
Think of BSEC as the referee. The DSE is the playing field, the companies are the teams, and BSEC makes sure everyone follows the rules. The system is not perfect — no market regulator’s is — but its presence is essential.
Key Market Institutions
Beyond BSEC and the DSE itself, several institutions keep the market functioning:
Central Depository Bangladesh Limited (CDBL)
CDBL operates the Central Depository System (CDS), which holds all shares in electronic form. When you buy shares, they are credited to your Beneficiary Owner (BO) account at CDBL. When you sell, they are debited. This replaced the old paper certificate system and made trading faster, safer, and more transparent.
DSE Clearing and Settlement
When you buy a share, the money does not leave your account instantly, and the shares do not appear immediately either. The DSE’s clearing house handles the settlement process, ensuring that buyers get their shares and sellers get their money. Bangladesh follows a T+2 settlement cycle — trades settle two business days after execution.
Investment Corporation of Bangladesh (ICB)
ICB is a government-owned financial institution that participates in the capital market through mutual funds, unit funds, and direct investment. For small investors, ICB mutual funds offer a way to invest in a diversified basket of stocks without picking individual shares.
Understanding DSE Indices
An index tracks the performance of a group of stocks, giving you a quick snapshot of how the market is doing overall. The DSE has three main indices:
DSEX (DSE Broad Index)
This is the primary index, launched in 2013. It includes all eligible listed companies and uses a free-float market capitalization methodology. When people say “the market went up today,” they are usually referring to DSEX. It is the number you see in headlines.
DS30 (DSE 30 Index)
This tracks the 30 largest and most liquid stocks — blue chips, in market parlance. If you want to know how the biggest, most established companies are performing, DS30 is your indicator. Companies in DS30 include major banks, pharmaceuticals, telecoms, and industrial conglomerates.
DSES (DSE Shariah Index)
For investors who prefer Shariah-compliant investing, DSES tracks stocks that meet Islamic finance criteria. These companies avoid excessive debt, interest-based income, and involvement in prohibited sectors.
Market Sectors on the DSE
The DSE organizes listed companies into sectors. Understanding sectors helps you diversify your investments and identify trends. Key sectors include:
| Sector | Characteristics | Examples of Focus |
|---|---|---|
| Banking | Largest by number of stocks, highly liquid | Interest income, loan growth |
| Pharmaceuticals | Defensive, consistent domestic demand | Drug manufacturing, exports |
| Fuel & Power | Stable cash flows, government-linked | Electricity generation, gas |
| Engineering | Tied to infrastructure spending | Steel, cables, machinery |
| Textiles & Garments | Export-driven, currency-sensitive | RMG exports, yarn |
| Cement | Cyclical, tracks construction | Urbanization demand |
| IT & Telecom | Emerging, high growth potential | Software, connectivity |
| Food & Allied | Defensive, population-driven | FMCG, dairy, edible oil |
| Insurance | Undervalued segment, low liquidity | Life and general insurance |
For a deeper look at building a portfolio across sectors, see our guide on building a diversified DSE portfolio.
DSE vs. CSE: Which One Matters?
Most companies are listed on both the DSE and CSE, and prices are generally similar. However, the DSE dominates in terms of:
- Trading volume — The vast majority of daily trades happen on the DSE.
- Liquidity — It is easier to buy and sell shares quickly on the DSE.
- Broker availability — More brokers operate primarily on the DSE platform.
For a new investor, the DSE is where you will do virtually all your trading. The CSE exists and functions, but it is the secondary market in practice.
Market Categories
The DSE classifies stocks into categories based on their financial health and compliance:
- A Category — Companies that held their AGM on time and declared at least a 10% dividend. These are generally the most reliable.
- B Category — Companies that held their AGM but declared less than 10% dividend.
- Z Category — Companies that failed to hold an AGM, did not declare dividends, or have other compliance issues. These carry higher risk.
- N Category — Newly listed companies.
As a beginner, sticking primarily to A-category stocks is a sensible approach. They represent companies with a track record of governance and shareholder returns.
Trading Hours and Days
The DSE operates Sunday through Thursday, reflecting Bangladesh’s work week. Trading hours are:
- Pre-opening session: 9:30 AM – 10:00 AM
- Continuous trading: 10:00 AM – 2:30 PM
- Post-closing session: 2:30 PM – 2:40 PM
All times are Bangladesh Standard Time (BST, UTC+6). The market is closed on Fridays, Saturdays, and public holidays.
What Is Next
Now that you understand the structure and institutions behind the DSE, the next practical step is getting yourself set up to actually trade. In the next post, we will walk through how to open a BO account, choose a broker, and prepare for your first investment.
Think About This
- Why do you think BSEC imposes circuit breakers that limit how much a stock price can move in a single day? What problem does this solve, and what problems might it create?
- If the DSEX drops 2% in a day but a pharmaceutical stock you hold goes up 1%, what does that tell you about the relationship between individual stocks and the broader market?
- Look up the current DSEX value. Without any other context, can that single number tell you whether it is a good time to invest? Why or why not?
