Requirements and Operation Procedures of Custodian Account in Bangladesh

1. Custodian Services Requires –

1.      Custodian License – We shall have to obtain a custodian license from the Securities and Exchange Commission (SEC) through some formal procedures.

2.      Custodian DP License – After getting the custodian license from SEC, we shall have to apply to Central Depository Bangladesh Limited (CDBL) for a Custodian DP License.

3.      FC Account – A non resident Bangladeshi, who is interested to open share trading account with us, will open an FC Account with any AD Branch of any bank (we shall prefer accounts in our Bank).

4.      NITA Account – Non-resident Investment Taka Account, which shall be opened by the same FC Account holder in the same Branch maintain the FC Account.

5.      Custodian BO Account – for each investor a separate BO Account has to be opened under Custodian DP License.

1. Opening a Custodian BO Account involves –

1.      Completion of a account opening form which includes a BO account opening form, a custodian form and some other relevant forms.

2.      Opening a trading code and clearing BO for each client account with each of our Panel Brokers.

1. After opening a Custodian BO Account a Non-Resident Bangladeshi can trade shares in the capital market. This process of share trading involves a number of steps –

1.      The fund is send by the client in the FC Account in foreign currency.

2.      The foreign currency is converted into taka as per the day’s rate of that currency and transferred to NITA Account.

3.      The client sends his/her buy/sale order through email or FAX (a written format is a must) otherwise the buy/sale has to be signed beforehand by the client if he/she wishes to trade over telephone.

4.      The trade orders are executed through our panel brokers.

1. Receive/Payment settlement with Brokers and Clients –

1.      Once a share is bought in a clients account, MBD shall make a written request to the Bank’s Branch to issue a Pay Order by debiting the concerned NITA account in favour of the broker through which the share has been purchased. Separate Pay Orders should be issued for each NITA Account/Custodian BO Account. Similarly in case of sale of shares, the Brokers will issue separate Pay Order against each NITA account/Custodian BO Account.

2.      In case the client wants to withdraw fund, MBD shall make a written request to the Bank’s Branch maintaining the NITA Account to make arrangements for remitting/transferring the fund to the clients Account at abroad on written confirmation of the client.

The following documents/description should be attached along with Form- KA for custodian license.

 1.    Attested copies of Certificate of Incorporation, Memorandum, and Articles of Association.

2.    Attested copy of Regulatory license for operation from Bangladesh Bank.

3.    Attested copy of Board Resolution for securing custodian licenses mentioning detail description of all directors.

4.    Brief description of business conducting in home and abroad.

5.    Detail description of proposed manpower for custodian service.

6.    Detail description of place for custodian services, safe volt, measures for protecting assets in case of disaster, risk management etc.

7.    Detail description of required alternative measures in case of failure of computer system.

  **                Reference:

 Section 4, Chapter 14, Foreign Exchange Guidelines Vol-1, Bangladesh Bank.