SEC Quarterly Review 

Oct-Dec 2001 


 Inspection:  During the period from October to December 2001, eight brokerage houses have been inspected based on some specific observations of surveillance people monitoring daily share trading.
Enquiry: Based on the above inspection an enquiry committee was formed under section 21 of the Securities and Exchange Ordinance, 1969 to enquire into the affairs of Mostaque Ahmad Sadeque & Co (DSE Member) and Moharram Securities Ltd. (CSE Member). Another enquiry was also initiated from the surveillance department to enquire into the trading of fake shares of Al-Arafa Islami Bank.
Surveillance: Constant real time monitoring of the trading of Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. through non-trading version of Work Stations is continuing unabated. The surveillance people time to time inform the top management of the commission about the market condition who then, if necessary, talk with the management of the respective Exchanges. At the end of the trading, a report pointing out any highlight or abnormal activity found during the trading is prepared and submitted to the Chairman & others.
Analysis of trading data: Post trading analysis is still continuing at the surveillance department and in this connection relevant data and trading information are regularly collected from the Exchanges based on which analysis and calculation are done sometimes manually and sometimes with the help of software. The purpose of this post trading analysis is to find out the unusual behavior of trading. If any abnormal trend or volatility in terms of turnover and price movement is noticed, a primary inspection is conducted in order to ascertain the reason behind such volatility and when anything is suspected wrong, the matter is referred to the higher authority for further action.
Revision of Existing Index Calculation of both the Exchanges: The surveillance department observed that under the previous method of index calculation there remained scope where one can easily influence market capitalization and ultimately the all share price index only by trading least number of shares of large capital base companies. On 31.10.2001 while monitoring the daily trading data of DSE and CSE it was observed that all share price index was moving upward as the gainers outnumbered the losers at 1.45 pm i.e. 15 minutes before the post closing session at DSE, but the index came down from 652 to 648 only due to  trading of 100 shares of BATBC at 9.98 % reduced rate. As such, in order to eliminate the scope of influencing the market capitalization with the trading of minimal quantity of shares, the surveillance department suggested for consideration of the market value of traded volume instead of all share price based market capitalization to calculate the index.