SEC asks bourses to gear up monitoring and use restrictive tools
FE Report | Wednesday, 11 June 2008
The securities regulator has asked the bourses to gear up monitoring and to take immediate action against any unusual behaviour of any issues as it deems the present market is posing risk for investment.
The directive came in a tripartite meeting between Securities and Exchange Commission (SEC), Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) held at the commission Tuesday.
SEC executive director Farhad Ahmed told reporters, "As per the immediate measures, the bourses can bring the trading of any issues under 'spot market' or suspend the trade to cool down the overheated market."
The commission has expressed serious concern over the current market situation as the price earning ratio exceeds 25, indicating ominous sign for the market because under this situation, if any investors make investment, it will take 25 years to get back his or her investment, he added.
Another ominous sign is that the merchant banks have reduced their portfolio investment to six to eight per cent from earlier 25 to 30 per cent, meaning the market is so risky for investment, according to meeting.
Meanwhile, the commission will sit tomorrow (Thursday) with the merchant banks along with DSE and CSE to review the latest situation in the market.
"After elaborate discussion over the present market situation, the commission has directed the bourses to remain strongly vigilant over the market and to go for immediate action if any abnormal situation arises," a spokesman told reporters after the meeting.
He said, "We reached in consensus that the present market is posing risky for investment."
"The individual investors will have to bear the brunt if any massive correction happens as the institution squeezed their portfolio investments," Farhad said.
The SEC also directed to monitor the branches of brokerage houses opened in and out side city whether they are being properly regulated and disseminate the information related to investment among the investors especially investors of divisional branches to make them alert on injecting fund on any shares.
"The SEC has recently noticed the short sale is increasing alarmingly, which usually influences the market," Executive director of the commission said adding that though short sale is legal but the commission directed the DSE and CSE to remain vigilant over the short sale whether it is being done in line with securities rules.
He said, "Some body have tendency to catch fish in troubled water under the present market situation. So, the commission directed the bourses to take strong measures for the sake of establishing discipline in the market."
The directive came in a tripartite meeting between Securities and Exchange Commission (SEC), Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) held at the commission Tuesday.
SEC executive director Farhad Ahmed told reporters, "As per the immediate measures, the bourses can bring the trading of any issues under 'spot market' or suspend the trade to cool down the overheated market."
The commission has expressed serious concern over the current market situation as the price earning ratio exceeds 25, indicating ominous sign for the market because under this situation, if any investors make investment, it will take 25 years to get back his or her investment, he added.
Another ominous sign is that the merchant banks have reduced their portfolio investment to six to eight per cent from earlier 25 to 30 per cent, meaning the market is so risky for investment, according to meeting.
Meanwhile, the commission will sit tomorrow (Thursday) with the merchant banks along with DSE and CSE to review the latest situation in the market.
"After elaborate discussion over the present market situation, the commission has directed the bourses to remain strongly vigilant over the market and to go for immediate action if any abnormal situation arises," a spokesman told reporters after the meeting.
He said, "We reached in consensus that the present market is posing risky for investment."
"The individual investors will have to bear the brunt if any massive correction happens as the institution squeezed their portfolio investments," Farhad said.
The SEC also directed to monitor the branches of brokerage houses opened in and out side city whether they are being properly regulated and disseminate the information related to investment among the investors especially investors of divisional branches to make them alert on injecting fund on any shares.
"The SEC has recently noticed the short sale is increasing alarmingly, which usually influences the market," Executive director of the commission said adding that though short sale is legal but the commission directed the DSE and CSE to remain vigilant over the short sale whether it is being done in line with securities rules.
He said, "Some body have tendency to catch fish in troubled water under the present market situation. So, the commission directed the bourses to take strong measures for the sake of establishing discipline in the market."