Market's weaknesses, regulatory conflict cut short post floor momentum

Tension has been heightened among investors as they saw one after another an operational failure wiping out most of the prime index and a conflict between two regulatory bodies over the Ramadan trade schedule.
That made a huge impact on the DSEX, the broad index of the Dhaka Stock Exchange (DSE), dragging it down for the fourth straight day on Tuesday to near 6000 points.
It seemed to be a manifestation of the momentum that the market gained after the floor price removal fizzling out.
The index lost 51.61 points on Tuesday from the previous trading session and 441 points from the recent peak at 6447 on February 11.
Due to lower investor participation, the turnover also fell below Tk 5 billion from as much as over Tk 18 billion in February this year. If the DSE experiences any marginal correction on Wednesday, the DSEX will go below 6000 points.
Investors have been jittery since Sunday when a severe technical glitch reduced the broad index by 5971 points to 141 points.
That day the DSE told investors on its website not to panic.
"Any announcement telling people not to be panicked creates panic. Investors lose confidence in the market due to repetitive incidents of technical glitches," said Managing Director of Midway Securities Md. Ashequr Rahman.
The premier bourse had experienced technical problems many times. Every time an expert panel was formed to look into what had gone wrong and solve it. But the bourse is yet to strengthen its IT infrastructure.
This time too, the Bangladesh Securities and Exchange Commission (BSEC) formed a probe body.
Meanwhile, the market opened on Tuesday according to a revised schedule meant for the month of Ramadan.
But there is a disagreement between the DSE and the securities regulator over the trading duration.
The DSE fixed 10:00am for trading to begin and 1.20pm to end since the DSE regulations give the onus on it to decide trading schedule.
However, the securities regulator set a different timing for the Ramadan.
On Tuesday, the DSE conducted trading until 1.40pm, instead of 1.20pm, as per the schedule set by the securities regulator.
The market opened the session at 9.30am, instead of 10:00am.
Preferring anonymity, a senior DSE official said it was not the job of the securities regulator to revise trading hours. The DSE board has been taking the decision for years.
Asked, Mohammad Rezaul Karim, spokesperson and an executive director of the BSEC, said the regulator decided trading hours for the Ramadan so to remove confusions between the two bourses.
The DSE officials pointed out the risk involved.
He said spot settlements were executed in line with T+0 trading cycle, meaning shares needed to be transferred to buyers' accounts on receipt of the payments.
There is a direct relation between trading hours and banking hours.
During the Ramadan, transactions in banks are allowed until 2:30pm.
If the trading is closed at 1:40pm, it will take another 25 minutes to upload all transactions-related data on the exchanges' platform. It then gets difficult to execute spot settlement on receipt of funds from clients through the banking channel within the given timeframe.
So, there is a risk that brokers may have to settle trades with funds from consolidated customers' accounts.
In this regard, BSEC spokesperson Mr. Karim said the trading period had been kept as it was for the Covid period.
But banking activities were not as intense during Covid as in the present time.
DSE officials also said fasting people would find it inconvenient to begin trades before 10:00am.

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