Bangladesh Securities and Exchange Commission (BSEC) has sought explanation from the chief executive officers (CEOs) and managing directors (MDs) of 15 stock brokerage firms immediately after they were found to be involved with aggressive share sale.
The stock market issued notice to the firms on Tuesday, asking them to respond within the next 48 hours.
According to the BSEC, the brokerage houses issued sales orders for a large number of shares of some fundamentally strong companies even before 10:00am when the daily trading was yet to start.
The regulator described the aggressive bid to sell good shares at the lowest price in the pre-opening session as a plot to drag stock indices down and this is why it sought explanation from the brokers.
The brokerage firms are – Shahed Securities, Bank Asia Securities, IDLC Securities, S&H Equities, LankaBangla Securities, BD Finance Securities, MTB Securities, Mercantile Bank Securities, UCB Stock Brokerage, Globe Securities, Shanta Securities, Sheltech Brokerage, Iceland Securities, Quayum Securities, and Midway Securities.
The executive director of BSEC, Md Rejaul Karim, told Prothom Alo that the regulator asked the 15 firms to make their stance clear regarding the issue. Further step will be taken after receiving their explanation.
The aggressive sale order pulled the good shares down to the lower circuit in the opening. As a result, the benchmark DSEX index of the Dhaka bourse nosedived 50 points in the first 10 minutes of trading.
However, the index recovered to some extent and managed to end the day at 6,530 points, up by 47 points or 0.73 per cent from the previous day.
The stock indices were on a free-fall for the last several days what forced the regulator to beef up its surveillance on the market. Later, it found the brokers to have flouted rules and regulations of share trading.
As per the current rules, the bourses count lower circuit limit at 2 per cent, which means that a share cannot shed less than 2 per cent in a day.
The CEOs of a number of brokerage firms that received the BSEC notice said that they had issued the sales orders as per instructions from the investors.
Some investors, even before beginning of the day’s trading, ask the brokers to sell their shares at a price down by 2 per cent from the previous day and the brokers only follow the instructions, they said, claiming that there are legal arrangements to issue sales orders in pre-opening session.
They also said many investors are pulling out their money from the stock market ahead of Eid worrying little about profit or loss.
“We are just executing their instructions,” they added.
Earlier on Monday, the stock market regulator ordered the suspension of 15 traders or authorised representatives of nine brokerage houses at the Dhaka Stock Exchange (DSE). The BSEC alleged that the brokers issued zero-price bulk orders for good shares that dragged down the indices abnormally.
However, share trading at market price or zero price is a common phenomenon in the capital market as the DSE trading system contains this method and the traders use it more or less, claim dealers.