FE Report (January 21, 2011)
The securities regulator banned six brokerages from share trading for the next 30 days after the firms' sale orders on Thursday were blamed for triggering five minutes of mayhem at the Dhaka Stock Exchange.
The Securities and Exchange Commission was swift to mete out justice against the brokerages after their actions saw the DGEN, the benchmark index, plunge 8.5 per cent or 587 points in what officials say the market's briefest trading session.
"We analysed all of Thursday's trade data and we found that huge sales orders of the six brokerages led to the collapse," SEC Member Muhammad Yasin Ali told a press briefing.
The firms included securities arms of Dhaka Bank, NCC Bank and Al Arafah Islami Bank and three brokerages, namely, PFI Securities, Alliance Securities and Management and IIDFC Securities.
Ali said the amount of sale orders in the six brokerages was far higher than the buy orders and "they placed huge sale orders at very low prices compared to the buy orders, which were placed at comparatively higher rates."
"As a result, the stock market faced a huge trade volume in just five minutes into trading, sparking the steepest fall," he added.
According to the securities laws, a brokerage must be allowed to defend itself in a hearing before the SEC can take such punitive measures. Ali said the regulator could not hold hearings due to lack of time.
"The hearings will take place on Sunday. The regulator will examine trading activities of the firms and also their chiefs and may take further actions," another SEC official said.
The Securities and Exchange Commission (SEC) has also banned the chief executives of the six firms from share trading or performing any duties pertaining to the stock market for the next 30 days.
However, the depository participant (DP) accounts of the firms will remain active, meaning their investors will be allowed to carry on share trading by opening link accounts with other houses.
At the press briefing, the SEC said Thursday's trading was halted at a loss of 587 points although it crossed the circuit breaker threshold of 225 points by a huge margin. The SEC had imposed the circuit breaker a day earlier.
"There will no adjustments because the circuit-breaker was not automated," said a SEC official, adding Thursday's transaction will be accepted and considered "official" in line with the securities laws.
Share trading will be suspended on Sunday and the next trading day will be fixed after tripartite talks between the regulator, the stock exchanges and the government officials, he added.
The securities regulator banned six brokerages from share trading for the next 30 days after the firms' sale orders on Thursday were blamed for triggering five minutes of mayhem at the Dhaka Stock Exchange.
The Securities and Exchange Commission was swift to mete out justice against the brokerages after their actions saw the DGEN, the benchmark index, plunge 8.5 per cent or 587 points in what officials say the market's briefest trading session.
"We analysed all of Thursday's trade data and we found that huge sales orders of the six brokerages led to the collapse," SEC Member Muhammad Yasin Ali told a press briefing.
The firms included securities arms of Dhaka Bank, NCC Bank and Al Arafah Islami Bank and three brokerages, namely, PFI Securities, Alliance Securities and Management and IIDFC Securities.
Ali said the amount of sale orders in the six brokerages was far higher than the buy orders and "they placed huge sale orders at very low prices compared to the buy orders, which were placed at comparatively higher rates."
"As a result, the stock market faced a huge trade volume in just five minutes into trading, sparking the steepest fall," he added.
According to the securities laws, a brokerage must be allowed to defend itself in a hearing before the SEC can take such punitive measures. Ali said the regulator could not hold hearings due to lack of time.
"The hearings will take place on Sunday. The regulator will examine trading activities of the firms and also their chiefs and may take further actions," another SEC official said.
The Securities and Exchange Commission (SEC) has also banned the chief executives of the six firms from share trading or performing any duties pertaining to the stock market for the next 30 days.
However, the depository participant (DP) accounts of the firms will remain active, meaning their investors will be allowed to carry on share trading by opening link accounts with other houses.
At the press briefing, the SEC said Thursday's trading was halted at a loss of 587 points although it crossed the circuit breaker threshold of 225 points by a huge margin. The SEC had imposed the circuit breaker a day earlier.
"There will no adjustments because the circuit-breaker was not automated," said a SEC official, adding Thursday's transaction will be accepted and considered "official" in line with the securities laws.
Share trading will be suspended on Sunday and the next trading day will be fixed after tripartite talks between the regulator, the stock exchanges and the government officials, he added.
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