SEC steps up market watch but rules out intervention
Friday, 21 May 2010
Mohammad Mufazzal
The securities regulator has stepped up surveillance of the country's two bourses but ruled out any intervention to cool the markets down, officials said Thursday.
The two bourses have broken one record after another in the last five days after the government allowed conversion of high priced shares into stocks face-valued at Tk10 each.
Although the decision has fundamentally made no changes in the companies' stocks, it sets off a record-breaking run in the bourses as it enables small investors to buy some of the best performing companies.
Officials of the Securities and Exchange Commission (SEC) Thursday said they have found no foul-plays in the market, but they have stepped up monitoring share prices and brokerages.
The SEC has dispatched two inspection teams to the brokerage houses of the DSE as its benchmark DGEN index gained 234 points in the past five days.
The DGEN index has closed in on 6,000 mark on Thursday amid worries of overheating and an impending bubble that can burn fingers of hundreds of thousands of investors who joined the bonanza late.
"We have been observing the market keenly over the last one week. But so far, we haven't noticed anything unusual or wrong," said a SEC official.
He said the regulator sees no reason to lower margin loan ratios despite the market turnover has hovered around Tk20 billion in the past week.
"At present, the market needs no intervention unless we observe any irregularities including violation of margin loan ratio criteria," he said.
An official of the surveillance department said during the last week, they visited several brokerage houses in the capital and closely looked at their trading.
"We haven't found any violation of securities rules," he said.
Officials said the SEC would not take any decision that "prevents money supply in the market."
The regulator has also sent messages to brokerage houses and merchant banks, reminding them that splitting of face-value or market lots of shares does not bring any fundamental change to a company.
"We hope the brokerage houses would spread the message to their member-investors," an SEC official said.
Last week the bourses and Bangladesh Merchant Bankers' Association have asked the regulator not to impose any harsh measure, pleading that the markets be left to their own devises.
The securities regulator has stepped up surveillance of the country's two bourses but ruled out any intervention to cool the markets down, officials said Thursday.
The two bourses have broken one record after another in the last five days after the government allowed conversion of high priced shares into stocks face-valued at Tk10 each.
Although the decision has fundamentally made no changes in the companies' stocks, it sets off a record-breaking run in the bourses as it enables small investors to buy some of the best performing companies.
Officials of the Securities and Exchange Commission (SEC) Thursday said they have found no foul-plays in the market, but they have stepped up monitoring share prices and brokerages.
The SEC has dispatched two inspection teams to the brokerage houses of the DSE as its benchmark DGEN index gained 234 points in the past five days.
The DGEN index has closed in on 6,000 mark on Thursday amid worries of overheating and an impending bubble that can burn fingers of hundreds of thousands of investors who joined the bonanza late.
"We have been observing the market keenly over the last one week. But so far, we haven't noticed anything unusual or wrong," said a SEC official.
He said the regulator sees no reason to lower margin loan ratios despite the market turnover has hovered around Tk20 billion in the past week.
"At present, the market needs no intervention unless we observe any irregularities including violation of margin loan ratio criteria," he said.
An official of the surveillance department said during the last week, they visited several brokerage houses in the capital and closely looked at their trading.
"We haven't found any violation of securities rules," he said.
Officials said the SEC would not take any decision that "prevents money supply in the market."
The regulator has also sent messages to brokerage houses and merchant banks, reminding them that splitting of face-value or market lots of shares does not bring any fundamental change to a company.
"We hope the brokerage houses would spread the message to their member-investors," an SEC official said.
Last week the bourses and Bangladesh Merchant Bankers' Association have asked the regulator not to impose any harsh measure, pleading that the markets be left to their own devises.