The Bangladesh Securities and Exchange Commission has asked the Dhaka and Chittagong stock exchanges to investigate short-selling of securities by certain stockbrokers detected by the regulator’s surveillance system. The BSEC on Wednesday directed the Dhaka Stock Exchange and the Chittagong Stock Exchange to look into the unlawful activities. Short-selling is a type of sales of securities not owned by the seller.
The BSEC letter sent to the bourses said, ‘The stock exchanges will investigate short-selling of securities by stockbrokers based on the short-selling alerts generated by the BSEC’s instant watch market surveillance system.’
The commission will provide reports to the bourses regarding the short- selling on daily basis.
The BSEC letter also asked the bourses to submit reports within five days from receiving of the letter from the commission.
The capital market regulator will open separate desk for prompt investigation into short-selling reports to be provided by the bourses, the directive said.
The BSEC in the letter also told the DSE that the bourse would not have to submit to the commission the list of top thirty selling clients until further order.
The regulator in October had fined a brokerage firm for short-selling of its clients’ shares and asked the bourses to take action against short-selling by brokers.
The BSEC’s surveillance software had detected short-selling by Hillcity Securities, a member of the CSE, of 5,000 shares of First Security Islami Bank on May 15 last year.
In November last year, the BSEC, expressing its dissatisfaction over the
bourses’ steps in preventing short-selling by stockbrokers, asked bourses to take more preventive measures to stop the unlawful practice.
‘The BSEC has detected a number of short-sales alerts in the daily securities trading of stock exchanges since the inauguration of new market surveillance system which are not desirable,’ the BSEC letter said.
It also said, ‘The matter was discussed with the CEOs of the DSE and the CSE and they were advised to take initiatives to prevent brokerage houses from short-selling, but no significant improvement is seen.’
The commission has instructed the bourses again to strengthen their supervision, investigation and monitoring on securities market transactions to prevent short-selling, the BSEC official said.
In December 2012, the BSEC launched its own surveillance software to detect market manipulation.
-With New Age input
