Foreign Trade Account Summary
Any foreigners residing in Bangladesh or abroad willing to invest in Bangladesh Capital Market are considered foreign investors. Foreign investors need to open a trading account with International Leasing Securities Ltd (ILSL) for trading of securities in Bangladesh Capital Market. They also need to open a Custodian Account with any Custodian Bank in Bangladesh. Other accounts such as cash account or NITA Account, Securities Account and Foreign Currency Account are needed to open with the Custodian.
Trade:
After completing the above mentioned formalities, the Foreign Trading Account (FTA) can directly trade with ILSL. They can give buy / sell order to ILSL through e-mail and /or fax or through phone. Trade confirmation will be sent to the FTA holder after execution of trade through e-mail or fax.
Settlement:
Settlement Process is done mutually by ILSL and the Custodian Bank through DVP process (Delivery VS Payment). The settlement period varies with different categories shares- i.e. T+3 for A, B, G, N categories, T+ 9 for Z category. When the shares are traded in spot market, then settlement period is T + 0 for the above mentioned all categories.
Fees:
There is only one fee or charge which ILSL charge to its foreign client as Brokerage Commission which is set around 0.50% on total trade value.
Tax:
Foreign individual investors are subject to pay tax @ 25% on cash dividend, deducted at source. The rate is 20% on institutional investors. Foreign investors also subject to capital gain tax @ 10% on capital gain or profit portion which will be charged at the time of repatriation of money.
Customer Account Information:
FTA needs to fill a Customer Account Information Form with ILSL. The form is different for individual investors and institutional investors. They also need to attach photocopy of other required documents, stated below:
For institutional investors
- A copy of the Memorandum and Articles of Association of the company;
- A copy of the Certificate of Incorporation of the company;
- A copy of the Authorization/Board Resolution to open and operate the account with us;
- A copy of the Authorization/Board Resolution authorizing the officials to operate the account, including their photographs;
For individual investors
- Valid Passport;
- Three colored passport size photograph;
- Name & Address of the introducer as accountholder of ILSL/lawyer/auditor or any competent authority;
BO Account Opening:
For BO account opening, FTA needs to open a Custodian Account with any custodian bank in Bangladesh. (Custodian banks in Bangladesh are working as custody participants).
Along with BO account opening, the bank will open other accounts, such as Cash Account (or NITA A/C), Securities A/C and F/C Account.
Custodian Bank:
The list of custodian banks is as follows:
- Standard Chartered Bank
- Hong kong and Shanghai Banking Corporation
- Brac Bank
- Citi Bank N.A. Bangladesh
- Southeast Bank Ltd.
- Commercial Bank of Ceylon PLC
Tax Impact:
|
Foreign Trading Account (FTA) |
Individual |
Institution |
|
Cash Dividend (deducted at source) |
25% |
20% |
|
Capital Gain |
0% |
10% |
Settlement Process:
There are different settlement processes for different categories of shares. The settlement process is done mutually by the brokerage house, ILSL and the Custodian Bank at DVP System (Delivery VS Payment).
Liquidity Management:
ILSL provides liquidity support to the foreign investor for their trading of securities (both individual and institutions) to facilitate the smooth transaction of securities under DVP system.
IPO Investment:
For IPO application, Foreign Investors (individual and institution) need to contact with the custodian bank. The custodian bank will help the investors for processing the IPO application in favor of them.
Research Facilities:
ILSL provides different types of research facilities to the investors including individual company research, Sectoral Report, Daily Marker Update, Weekly Market Update, Weekly Mutual Fund Update and many more.
Guidelines to Remit Foreign Brokerage Firm’s Commission:
Recently, Bangladesh Bank has issued guidelines / regulations regarding remittance of foreign brokerage firm’s commission to their respective country. Please click the below link for details:
http: //www.ilslbd.com /download-page.php.
Foreign Currency Guidelines of Bangladesh:
Foreign Exchange Guidelines Vol 1
Foreign Exchange Guidelines Vol 2
For any information please contact with us at the following address: securities@ilslbd.com or mobile # +880-1929996501