The Dhaka Stock Exchange (DSE) will begin disbursing 72 crore taka from the Investment Protection Fund (IPF) to 17,332 investors affected by five defaulted brokerage firms from September 28, as part of efforts to settle long-standing liabilities and restore investor confidence.

The DSE announced the decision at a press conference held on Tuesday at its premises in Nikunja, Dhaka.

Public confidence in the country’s capital market was severely damaged after five brokerage firms were found to have misappropriated nearly 500 crore taka of investors’ money between 2019 and 2024.

Trading in Banco Securities, Crest Securities, Tamha Securities, Shah Mohammad Sagir & Co., and Moshihor Securities has remained suspended after the market regulator uncovered irregularities involving the firms during the period.

To address the damage caused by the defaults, the DSE is now focusing on repaying affected investors through the IPF, a statutory mechanism that has not been fully utilised in the past. 

The exchange has now accelerated the process, after disbursing only Tk 50 crore from the fund over the past six years. The pace of payouts is now expected to increase significantly.   

The payout will cover 17,925 investors, of whom 17,332, or around 97 per cent, will receive full compensation for claims up to Tk 5 lakh under the approved framework.

Investors with claims above Tk 5 lakh will receive compensation up to the statutory limit, while the remaining amounts will be recovered through asset liquidation, sale of securities held by the defaulting brokers and other recovery measures.

In the first two months from 28 September, the DSE will disburse Tk 42.73 crore to around 9,000 investors affected by Moshihor Securities, which allegedly siphoned off funds worth more than 100 crore taka. After that, the remaining amount will be disbursed to around 8,300 investors affected by the other four defaulted brokerage firms.

Mominul Islam, chairman of the DSE, said each eligible investor would receive a maximum of Tk 5 lakh against validated claims and that the entire distribution process would take slightly more than two months.

He said regulatory supervision and monitoring had also been strengthened to reduce the risk of future brokerage defaults.

The payout initiative follows a commitment from the Bangladesh Securities and Exchange Commission (BSEC) to return the funds to affected retail investors.

BSEC chairman Masud Khan had taken office with a clear commitment that the money would be returned to retail investors, industry representatives said.

Nasreen Begum, chairman of the IPF, said the payout was being made under the IPF Regulations 2014.

“The IPF operates under the 2014 IPF Regulations to protect investor interests during broker defaults. This is not charity or a discretionary payment; it is a statutory right under the law,” she said.

She added that the fund's responsibility was not limited to managing its resources but also to ensuring that payouts were made transparently, accountably and in accordance with the law.

A representative of the DSE Brokers Association of Bangladesh (DBA) said weaknesses in governance at some brokerage houses had damaged investor confidence.

“Today’s settlement marks the beginning of taking full responsibility and clearing those liabilities,” the representative said.

DSE targets T+1 settlement by December

Alongside the investor compensation programme, the DSE is pursuing a broader market-modernisation plan for 2026-28.

The exchange has already started preparations to shift from the existing T+2 settlement cycle to T+1 by December 2026. The plan also includes introducing open-ended mutual fund infrastructure within the same timeframe.

DSE board and management representatives said preparations were also underway to introduce financial derivatives and a next-generation trading matching engine by January 2028.

The exchange is also seeking to encourage new listings amid weak IPO activity. It has reduced bond listing fees and announced a 50 per cent waiver on listing fees for direct listings and IPO applications submitted through March 2027.

The measures come as regulators and market participants seek to strengthen investor protection, improve brokerage governance and modernise trading and settlement infrastructure in Bangladesh's capital market.