For transparent transactions in bourses
Tuesday, 18 May 2010
Manipulations of all sorts to reap undue profits by a section of investors, sponsor-directors of listed companies and stockbrokers are usual incidents in stock markets across the world. Bangladesh stock markets are no exception. In the latter part of the nineties, when cry-out and paper-based trading was in vogue, the incidents of irregularities were galore. During the 1996 stock boom, fake share certificates flooded the market, leading to heavy financial loss to thousands of innocent small investors. However, since the introduction of automated transactions in the bourses and establishment of a central depository, the situation has improved dramatically.
Now investors can buy and sell shares at a fast pace, even sitting at their homes or workplaces. The brokerage houses are not required to maintain a large volume of ledger books containing detailed transactions of their clients. In sum, everything is now at the fingertips. What is more important is the electronic transactions that are designed to ensure transparency and avoid manipulation in stock trading. Yet some evil brains are still trying to manipulate the modern trading system with a view to earning hefty profits. From time to time, they are found spreading rumours and operate through a section of dishonest brokerage houses very tactfully, to achieve their evil ends. And to stop this kind of activities, the securities regulators world over remain watchful constantly. They regularly monitor daily transactions in bourses and keep watch on the operations of the brokerage houses to detect any abnormalities in their transactions.
In the main bourse of the country that is the Dhaka Stock Exchange (DSE), the stock prices have been, in many cases, unreasonably high in past months. It is widely believed that a group of people having a sizeable fund under its command has been pushing up the prices of stocks of their choice. And some brokerage houses have been working hand in glove with that group. But the Securities and Exchange Commission (SEC) has not been successful so far in detecting such manipulators. However, the Commission in an attempt to make the stock trading more transparent and manipulation-free asked the bourses to install uniform software in all the brokerage houses. The SEC, reportedly, issued the directive following the detection of financial crimes being committed by a section of influential brokerage houses through the beneficiary owner (BO) accounts of their clients.
The Chittagong Stock Exchange (CSE) has welcomed the SEC directive and expressed its willingness to co-operate. But the DSE does not see eye to eye with the SEC on the matter of installing the software in question in all of its member brokerage houses on the ground that nowhere in the world uniform software is installed for daily trading purposes in the bourses. The DSE authorities are reportedly of the view that the regulator would do its job well by seeking some common information from all the brokerage houses.
Whatever may be the reasons for which the DSE authorities are not in favour of the SEC's latest move for ensuring transparency of trading in bourses, the bulk of the investors would certainly like to see some safety-value in operation to protect their interests against all varieties of manipulators in the market to-day. From that perspective, the DSE authorities would need to convince them, on some strong rational grounds, about why they are approved to the installation of uniform software. The relevant law does otherwise mandate adequately the SEC to do the needful for the sake of transparency and fair play in the stock market. There is also no denying that as a regulator, the SEC is required to work in cooperation with the management of the bourses for smooth operation of the stock market, one of the main barometers of the economy. However, when it comes to protecting the interests of millions of investors, big and small, it needs to be firm enough to enforce discipline in the market.
Now investors can buy and sell shares at a fast pace, even sitting at their homes or workplaces. The brokerage houses are not required to maintain a large volume of ledger books containing detailed transactions of their clients. In sum, everything is now at the fingertips. What is more important is the electronic transactions that are designed to ensure transparency and avoid manipulation in stock trading. Yet some evil brains are still trying to manipulate the modern trading system with a view to earning hefty profits. From time to time, they are found spreading rumours and operate through a section of dishonest brokerage houses very tactfully, to achieve their evil ends. And to stop this kind of activities, the securities regulators world over remain watchful constantly. They regularly monitor daily transactions in bourses and keep watch on the operations of the brokerage houses to detect any abnormalities in their transactions.
In the main bourse of the country that is the Dhaka Stock Exchange (DSE), the stock prices have been, in many cases, unreasonably high in past months. It is widely believed that a group of people having a sizeable fund under its command has been pushing up the prices of stocks of their choice. And some brokerage houses have been working hand in glove with that group. But the Securities and Exchange Commission (SEC) has not been successful so far in detecting such manipulators. However, the Commission in an attempt to make the stock trading more transparent and manipulation-free asked the bourses to install uniform software in all the brokerage houses. The SEC, reportedly, issued the directive following the detection of financial crimes being committed by a section of influential brokerage houses through the beneficiary owner (BO) accounts of their clients.
The Chittagong Stock Exchange (CSE) has welcomed the SEC directive and expressed its willingness to co-operate. But the DSE does not see eye to eye with the SEC on the matter of installing the software in question in all of its member brokerage houses on the ground that nowhere in the world uniform software is installed for daily trading purposes in the bourses. The DSE authorities are reportedly of the view that the regulator would do its job well by seeking some common information from all the brokerage houses.
Whatever may be the reasons for which the DSE authorities are not in favour of the SEC's latest move for ensuring transparency of trading in bourses, the bulk of the investors would certainly like to see some safety-value in operation to protect their interests against all varieties of manipulators in the market to-day. From that perspective, the DSE authorities would need to convince them, on some strong rational grounds, about why they are approved to the installation of uniform software. The relevant law does otherwise mandate adequately the SEC to do the needful for the sake of transparency and fair play in the stock market. There is also no denying that as a regulator, the SEC is required to work in cooperation with the management of the bourses for smooth operation of the stock market, one of the main barometers of the economy. However, when it comes to protecting the interests of millions of investors, big and small, it needs to be firm enough to enforce discipline in the market.