Controversial surveillance plans for bond investors may be halted

In a significant development, officials reveal that the Bangladesh Securities and Exchange Commission (BSEC), under the leadership of the now-dismissed Prof. Shibli Rubayat, was poised to implement a contentious surveillance strategy on the country's stock exchanges.

This plan, in collaboration with a government telecommunications agency, aimed to monitor the online activities and voice-call records of stock-market investors.

The BSEC had reportedly been in discussions with the National Telecommunications Monitoring Centre (NTMC), a government agency criticized for its invasive tactics, to sign a Memorandum of Understanding (MoU). The MoU would have granted the NTMC access to data that could potentially violate the privacy of investors, with the goal of identifying those involved in market manipulation, insider trading, and the spread of misinformation.

According to sources, the BSEC argued in its communication with the Financial Institutions Division that enhancing information services and cyber-security was crucial for identifying fraudulent activities in the stock market. The proposed MoU would have allowed the NTMC to collect various data from the BSEC within seven working days of the agreement's signing, though it stipulated that securities-related data would remain off-limits.

The plan has sparked significant controversy. Amal Krishna Mandal, an additional secretary of the Financial Institutions Division, stated that the government had not yet decided whether to approve the MoU, acknowledging the complexity of the issue.

Prof. Shibli Rubayat Ul Islam, who was appointed chairman of the BSEC in May 2020 and reappointed for a second term in May 2024, resigned on August 10 following widespread student-led protests that led to the fall of the previous government. The interim government has since frozen the bank accounts of Mr. Islam and his son amid an anti-corruption campaign.

The Shibli Commission faced widespread criticism for policies that allegedly facilitated market manipulation, nepotism, and other unethical practices. Critics have questioned the necessity of involving the NTMC, given the BSEC's existing surveillance capabilities, which include access to both the Central Depository Bangladesh Limited (CDBL) and the Central Counterparty Bangladesh Limited (CCBL).

Concerns about the NTMC's potential role in monitoring stock-market investors have raised alarms among various stakeholders. Saiful Islam, president of the DSE Brokers Association of Bangladesh, warned that such surveillance could have catastrophic consequences for the stock market, especially by deterring foreign investment.

Similarly, Mazeda Khatun, president of the Bangladesh Merchant Bankers Association, expressed hope that the plan would not proceed in light of the current political climate, emphasizing the need for good governance rather than invasive monitoring.

Civil society representatives, including Badiul Alam Majumdar of SHUJAN, have also criticized the proposed collaboration, highlighting that privacy is a fundamental constitutional right. They argue that the NTMC's involvement in intercepting communications could lead to further erosion of trust in both the stock market and government institutions.

The proposed partnership between the BSEC and the NTMC remains in limbo as the newly appointed BSEC chairman considers the path forward.