BSEC Eases Mutual Fund Custodian Rules for Foreign Banks
By ThePip Desk
Bangladesh Securities and Exchange Commission relaxes mutual fund custodian rules for foreign banks, allowing local management committees to authorize account signatories, easing operations.
The Bangladesh Securities and Exchange Commission (BSEC) has reformed its mutual fund custodian rules for foreign-owned banks operating in the country. This new directive, issued on August 13, 2026, resolves a significant operational hurdle that previously hindered these financial institutions from fully serving as custodians for mutual funds.
Addressing Prior Regulatory Bottlenecks
Previously, the BSEC (Mutual Fund) Rules, 2025, mandated that signatories for mutual fund accounts be nominated directly by the custodian’s board of directors. This specific requirement posed a structural challenge for many foreign banks operating within Bangladesh’s financial landscape.
These multinational financial entities often do not maintain a local board of directors due to their global corporate frameworks. Instead, they rely on alternative high-level decision-making bodies to govern their local operations.
- Their ‘Management Committee‘
- ‘Nominated Persons‘ designated as their highest local authority
New Directive Streamlines Operations
The BSEC’s updated directive specifically permits these local management committees or designated authorities to legally empower and authorize signatories for mutual fund bank and securities accounts. This crucial adjustment aligns the regulatory framework with the operational realities of multinational banks.
Key players in Bangladesh’s capital market, such as Standard Chartered and HSBC, are examples of institutions impacted by this change. The relaxed rule helps integrate their global structures with local compliance needs.
Ensuring Market Stability and Investor Protection
Market insiders have applauded this development, noting its provision of essential regulatory clarity for the sector. It also ensures the seamless implementation of the 2025 Rules, which govern mutual fund operations.
The immediate enforcement of this directive is poised to ensure that mutual fund operations remain uninterrupted and compliant. This proactive measure by the BSEC ultimately safeguards investor interests within the capital market.