The securities regulator has sought explanation from 15 brokerage firms, including some leading ones, for placing sale orders at the lowest level of circuit breaker before starting the day's trading session.
The Bangladesh Securities and Exchange Commission (BSEC) on Tuesday sent letter to the brokerage firms, seeking their explanation over quoting prices of securities at 2.0 per cent down ceiling, based on yesterday's closing prices.
"Those 15 brokerage firms placed a huge volume of sale orders of some large-cap companies before opening the day's session. As a result, the market suffered from a negative impact after opening of the session," said Mohammad Rezaul Karim, the BSEC spokesperson and its executive director (ED).
He said complaints brought against the 15 brokerage firms would be disposed off, if their explanations seem satisfactory to the securities regulator.
"Otherwise, the BSEC will take measures against the brokerage firms as per the existing rules."
The brokerages, which have been asked to explain their position, include - Bank Asia Securities, Shahed Securities, Sheltech Brokerage, IDLC Securities, S & H Equities, LankaBangla Securities, BD Finance Securities, MTB Securities, Mercantile Bank Securities, UCB Stock Brokerage, and Globe Securities.
The other brokerage firms, which will have to submit their explanations, are - Shanta Securities, Island Securities, Quayum Securities, and Midway Securities.
The BSEC ED further said the traders were not supposed to know that the shares of the large cap companies would come down to the lowest limit of circuit breaker after opening the trading session.
"It was found that the market pries of the large-cap companies' shares saw price correction at the very beginning of the session. So, the placing of price quotation by those traders was unlawful," he added.
In its letter sent to the chief executive officers (CEOs) of 15 brokerage firm, the BSEC letter said: '…you have quoted prices of securities at 2.0 per cent down ceiling - based on yesterday's closing price - during the time period between 9:45 am to 10:00 am on 19.04.2022."
"This sort of activity may be treated as unlawful and (conducted) with mal-intent," it noted.
The securities regulator has asked the brokerage firms to explain their positions within 48 hours from issuance of the letter.
Asked, Bank Asia Securities CEO Sumon Das said the existing system allows placement of orders at the highest or the lowest level of circuit breaker.
"Perhaps, the sellers thought that they would not find any buyer, if they delay in placing sale orders. That's why, our traders placed the sale orders in line with clients' discretion," he opined.
In this regard, LankaBangla Securities CEO Khandoker Saffat Reza said some of their clients placed sale orders at the lowest end of circuit breaker by using their mobile trading app.
"We will take corrective measures, if there is any foul-play from our end," he mentioned.
On March 8, the securities regulator reduced the circuit breaker limit to 2.0 per cent from the previous 10 per cent at lower end - to contain massive price fall of listed securities amid a continuous downward trend of the market.
As a result, the market price of a listed security can go down at best 2.0 per cent - based on the closing price of the previous session.
Meanwhile, the securities regulator asked nine brokerages on Monday to suspend their 15 trading operators for executing their clients' sale orders without mentioning any market price of the securities.
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