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DSE to impose circuit breaker on third trading day

Mohammad Mufazzal | Published: May 03, 2015 00:00:00 | Updated: November 30, 2024 06:01:00


The country’s premier bourse has moved to impose circuit breaker on the third trading day of a newly listed company to contain unusual price hike, officials said.
The DSE’s latest move in imposing the circuit breaker on third trading day came in the backdrop of abnormal price hike of newly listed companies mainly observed within five days of debut trading.
It observed that the market price of some companies, which went public in last two years, zoomed up to 721 per cent on the day of debut trading.
A circuit breaker, which is imposed on the movement of a company’s share price based on closing price of previous session, determines the maximum limit of price hike and fall.
As per a regulatory notification, the bourses impose no circuit breaker on the shares’ prices of newly listed companies within first five trading days.  
But after one or two months, the initial market price of the shares did not sustain and started coming down to their offer prices. Some of the companies’ prices also went down below their respective offer prices.   
Different quarters allegedly influence the market price of newly listed companies during the period of free price movement.
Under such a situation the board of Dhaka Stock Exchange (DSE) has taken the decision in principle to impose circuit breaker on the third day of the debut trading.  
Md. Shakil Rizvi, a director of the premier bourse, said within five trading days of debut trading the companies’ prices go up abnormally in absence of any circuit breaker.
“But afterwards, the prices declined gradually. The DSE will submit its formal proposal to reduce the period of free price movement for curbing unhealthy price hike to the regulator soon,” Mr. Rizvi said.
Before submitting the formal proposal the DSE discussed the matter with the Bangladesh Securities and Exchange Commission (BSEC) at a meeting held at the BSEC office Thursday.
DSE managing director Dr. Swapan Kumar Bala also acknowledged that they have discussed the matter with the regulator.
Another meeting participant said that the regulator had orally agreed to take into account the DSE’s proposal.
It observed that the market price of Sunlife Insurance zoomed up 721 per cent to close at Tk 82.10, whereas the price of Ratanpur Steel Re-Rolling Mills (RSRM) rose 673 per cent to close Tk 77.30 on the day of debut trading.
Among other companies, the price of Khan Brothers PP Woven Bag Industries whopped 666 per cent to close at Tk 76.60, whereas the price of AFC Agro Biotech zoomed up 550 per cent to close at Tk 65, Far Chemical Industries 426 per cent to close at Tk 52.60, Emerald Oil Industries 400 per cent to close at Tk 50.0, Familytex (BD) 385 per cent to close at Tk 48.50, Shurwid Industries 382 per cent  to close at 48.20,  Bangladesh Building Systems 372 per cent to close at Tk 47.20 and Mozaffar Hossain Spinning Mills 353 per cent to close at 45.30 on the day of debut trading.
mufazzal.fe@gmail.com
 

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