SEC gives in to rowdy protest, restores loan operation by brokers

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FE Report
The Securities and Exchange Commission (SEC) Monday withdrew the ban, imposed November 19, on the disbursement of loan by the brokerage houses to retail investors after a group of traders staged rowdy demonstrations in front of Dhaka Stock Exchange (DSE) on the day.
The stock brokers are now allowed to disburse loan at the ratio of 1: 0.67 from today (Tuesday) as per the latest SEC directive.
The SEC order came immediately after the trading commenced an hour late due to a 'technical error' detection in the DSE's online facility. Market insiders, however, pointed out that the DSE halted the trading in the face of rowdy demonstrations against the decline in the prices of most shares on the day.
Earlier on November 23, the traders staged similar demonstration in front of the prime bourse protesting against the fall of shares price.
Police resorted to tough action on the marauding traders in front of DSE Building when they began to demonstrate at around 11:30 am.
Witnesses said some traders were injured in the police action.
The demonstrators also damaged cars and halted movement of vehicles in the area for a while.
Aggrieved traders also pelted stones at the police from the Modhumita Building that houses offices of some 40 brokers.
The benchmark DSE General Index or DGEN shed around 90 points until 11:20 am. But, the price barometer began to rise at about 12.30 pm when news reached the brokerage houses that SEC was going to take some positive steps.
"We took the decision after the DSE policy-makers urged us to review our November 19 directive on banning the credit facilities by the brokers," said SEC's executive director Farhad Ahmed.
Asked whether the Commission will take further action when the index rises abnormally, he said, "I think the market already got enough signals and will not go to such level as to compel the commission to take any unpleasant decision,"
"Such untoward incidents will affect the long term prospect of the securities market," he said adding without any SEC intervention the market will correct automatically.
The agitated traders, however, alleged that the SEC's measurers had already affected the small investors rather than protecting them.
Jahangir Alam, one of the agitated traders, expressed his resentment about the SEC's frequent move to squeeze the market.
After the demonstration staged by the investors, DSE president Abdullah Bokhari and vice president Ahmad Rashid Lali rushed to meet the acting SEC chairman Saleh Ahmed and urged the latter to lift the ban on loan disbursement by the brokers to the retail investors.
"We have discussed the overall situation and requested the commission to review its decision," Bokhari told reporters.
The market will regain its strength next year as good quality shares of some big companies are going to be floated, he said.
Market operators, however said the SEC intervention was needed as prices of some companies were overvalued.
Anwarul Kabir Bhuiyan, SEC executive director (surveillance department), said the regulatory body has received some classified information about price manipulation.
"The investigation is going on and if proved correct, appropriate action will be taken against those involved," he said.
On disruption of trading for an hour, he said " I have already instructed to form a body to look into the matter whether the trading was halted due to technical error or any other reasons.
Over hundreds of demonstrators chanted slogans during the trouble saying the recent decision of the SEC influenced share prices to dip sharply.
From the very start of trading, all market barometers witnessed a steep fall. But the indices regained because of institutional buying when trading resumed after one hour. The DSE extended the trading period by an hour.
The DSE General Index (DGEN), All Share Price Index (DSI) and DSE-20 Index (DS20) shed 5.44 points, 5.00 points and 0.70 points to close at 2873.29, 2428.91 and 2262.72 points respectively.
Total turnover rose to Tk 1.86 billion from previous day's Tk 1.35 billion. But the market capitalisation came down to Tk 716.05 billion from Tk 717.27 billion.
Out of the total 207 issues traded on the day, 96 advanced, 92 declined and 19 remained unchanged.
Brac Bank was the turnover leader with its shares worth Tk 216.24 million changing hands, followed by UCBL, Tk 159.01 million, PGCB, Tk 93.62 million, IFIC, Tk 81.32 million and IBBL Perpetual Bond, Tk 77.73 million.