The securities regulator has started developing a database of top officials, sponsor-directors and auditors of the listed companies, who are in the know about the price sensitive information (PSI), to fight against 'insider trading'.
The information of the officials of the securities regulator and stock exchanges will also be included in the database.
The regulatory move came in line with a work-plan approved recently to introduce market intelligence to curb rumours and suspicious transactions and other malpractices that hamper normal trading in the capital market.
"The listed companies' top officials and sponsor-directors are part of the insiders as they have involvement with different decisions, including dividend recommendations. In the first phase, their portfolios will be included in the data," said Mohammad Rezaul Karim, spokesperson for the Bangladesh Securities and Exchange Commission (BSEC).
Insider trading involves trading in a public company's stock by someone who has material non-public information about the securities for any reason. Since that kind of information has not been made available to the public, it can substantially impact investors' decision to buy or sell the security.
The BSEC spokesperson said the auditors who are employed by listed companies for two years are also big insiders of the listed companies.
"Their information will be collected in the second phase. Such information will be updated time to time as auditors are changed after a certain period," Mr. Karim said.
He said the database will help the commission identify the possible link, if any, of directors-sponsors, top executives, and traders with suspicious transactions of listed securities.
"Information about shareholding portions of sponsor-directors will be included in the database."
The role of suspected individuals will be examined if any listed security witnesses abnormal price hike without any sensitive information.
On Thursday, the securities regulator sent a letter to the state's cyber crime unit to take measures against the persons, who spread rumours in the capital market via social media.
Apart from approving an eight-point action plan, the securities regulator has recently taken the decision on changing the name of its surveillance department, now renamed 'Market Surveillance and Intelligence'.
The BSEC officials said the job of their market intelligence will start fully after determining specific areas of the department.
"An eight-point action plan will be implemented gradually to contain insider trading and other manipulations. Suspicious trade variations will also be probed into on a regular basis," said Mr. Karim.
According to the regulator's work plan, a separate intelligence wing will be formed in near future subject to the sufficient manpower at the BSEC office.
The BSEC officials said they will also work with the country's intelligence wings and report different suspicious matters to them for further investigation.
The BSEC spokesperson said rumours spread through social media will also be examined and stock exchanges may be asked to conduct investigations, which may impact daily transactions.
In line with the digital security act, the BSEC will turn to the government's intelligence wings to take actions against the persons who spread rumours though social media, the officials said.
"Coordination meetings will also be held on a regular basis to ensure lawful transactions in the capital market. The BSEC will also hold coordination meetings with top brokers on a regular basis."
The BSEC officials have also said a team will be formed comprising the IT officials of stock exchanges and securities regulator to watch trading activities on a regular basis.
They said an order has recently been issued to contain transforming non-margin accounts into margin accounts to ensure lawful disbursement of margin loans.
"We want strict regulations on margin loans," the BSEC official said.
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