The stockmarket regulator for the first time has fined the two bourses Tk 1 lakh each for flawed computations in indices and starting trade before transaction hours.
The Securities and Exchange Commission (SEC) yesterday through separate letters informed the Dhaka and Chittagong stock exchanges about the penalty, which they will have to submit to the regulator within the next 15 days.
SEC officials said the commission has fined Dhaka Stock Exchange (DSE), the premier bourse, for two reasons -- flawed counting and starting trade early. The penalty on Chittagong Stock Exchange, the port city bourse, was for starting trade of Grameenphone and Marico shares before opening of the trading hours.
Such activities of the bourses appeared to the commission as 'deliberate and clear contravention' of securities rules, the officials said.
"The commission has fined them so that no such violations take place in future, and to bring transparency and accountability in the exchanges," said a senior official of the SEC.
Officials of both the bourses confirmed the receipt of the SEC letters, but declined to make any formal comments.
In case of DSE, the first reason was that the bourse started trade of Grameenphone shares and AIMS 1st Mutual Fund units before opening of the regular trading session.
In line with Dhaka Stock Exchange Automated Trading Regulations, 1999, no entry order is allowed before the opening of the trading session.
Now the trading session starts at 11am sharp. But the SEC through investigations found that the bourse started trade of Grameenphone shares at 10:59:17am on November 16 last year. The exchange also executed another trade of AIMS Mutual Fund at 10:59:12am on February 25.
The second reason is flawed computations in indices. The SEC found that the DSE calculated its indexes using different methods for different stocks, violating a regulator's directive on index calculation while absorbing fresh companies.
The flawed calculation in indices came to light through media reports in January this year following the trade debut of Grameenphone shares on the stockmarket on November 16 last year.
On the day, the benchmark index of the DSE skyrocketed by more than 764 points.
This abnormal jump was due to faulty index counting. DSE adjusted the index from the first day of Grameenphone's trade based on the face value of Tk 10 each.
Later, the SEC found that the DSE counted the index on the first day adjusting market capitalisation for the securities concerned by multiplying the face value with outstanding shares instead of the previous day's closing price.
Also, the DSE did not follow its own method of index calculation while incorporating new securities under direct listing rules.
Jamuna Oil Company shares were first traded on January 9, 2008, but were included in the benchmark index on January 13, the third trading day. ACI Formulations and Shinepukur Ceramics experienced the same, and were included in the index on their fourth trading day.
Meghna Petroleum and Navana CNG were included in the index on their debut day.
After GP debut, the SEC directed the bourses to start counting index points from the second day of a company's trade, as the debut day does not reflect the real picture.
The SEC has also initiated a move to introduce a common index of stocks.
Source: thedailystar.net
