Bangladesh Securities and Exchange Commission (BSEC) Chairman Masud Khan on Monday called for a unified and highly secure back-office software system for all brokerage houses to prevent the embezzlement of investors' funds and recurrence of financial irregularities in the capital market.

“A unified back-office software, which will be highly protected and provide real-time data of brokers, has to be introduced so that we can see the full reconciliation every day,” he said at an event organised by the Dhaka Stock Exchange (DSE) at DSE Tower in Nikunja to launch the distribution of money from the Investors' Protection Fund (IPF) among investors affected by fund embezzlement at brokerage houses.

Masud said the system should provide regulators with real-time data on funds held in brokers' bank accounts and consolidated customer (CC) accounts, allowing daily reconciliation and early detection of any shortfall or irregularity.

The BSEC has already started discussions with the DSE on introducing the unified system for brokerage firms, he said.

“We have to do this digitally. There is no alternative,” Masud said, adding that the Order Management System (OMS) would also be modernised to make monitoring more automated and reduce the scope for irregularities.

He said the objective was not only to compensate affected investors but also to prevent such incidents from recurring.

“The figure is alarming. We do not want to be alarmed anymore; we want a permanent solution to this accumulated problem,” Masud said.

The compensation programme covers investors affected by financial irregularities involving five securities houses. According to figures presented at the event, 17,967 investors were affected.

Masud said around 96% of the affected investors had claims of up to 5 lakh taka and would initially receive full compensation within the applicable limit.

A DSE representative said 17,332 investors would initially receive payments of up to 5 lakh taka from the IPF.

The exchange had earlier announced an initial 72 crore taka payout programme for investors affected by five defaulted brokerage firms — Moshihor Securities, Tamha Securities, Crest Securities, Shah Mohammad Sagir & Co and Banco Securities.

The DSE has said investors whose claims exceed the initial payment limit will also be pursued for recovery through legal and other measures.

The DSE representative said the exchange had reviewed the records of affected investors to determine their actual balances before starting the repayment process.

He also thanked brokerage firms for contributing to the IPF. According to him, brokers contribute 25% of the interest earned on consolidated customer accounts to the fund.

Masud said the current compensation initiative was the result of joint efforts by the BSEC, DSE, IPF, investors and market intermediaries.

He said the IPF was originally established to address settlement-related risks, but its role had become increasingly important in Bangladesh's capital market following cases involving the alleged misappropriation of investors' funds.

The repayment programme is intended to provide immediate relief to affected investors, while regulators are pursuing stronger surveillance and technology-based controls to protect clients' funds.