The Bangladesh Securities and Exchange Commission (BSEC) is currently in a legal standoff over its order requiring mutual funds to convert to open-end schemes, despite a High Court stay on the directive. The order, issued on May 12, 2026, mandated all closed-end mutual funds to convert to open-end funds within six months, aiming to enhance liquidity and investor protection.
However, the High Court on June 2, 2026, issued a stay on the BSEC order following a petition by several asset management companies, who argued that the conversion would harm fund managers and investors. The court also issued a rule asking the BSEC to explain why the order should not be declared illegal.
Despite the stay, the BSEC has continued to push for compliance, leading to confusion among fund managers and investors. The commission has stated that it will challenge the High Court's decision in the Appellate Division, arguing that the conversion is necessary for the development of the capital market.
The standoff has created uncertainty in the mutual fund industry, with some fund managers halting new investments and others seeking legal advice. The BSEC has emphasized that the conversion order is part of its broader reform agenda to modernize the capital market and protect small investors.
