Dhaka stock exchange has its own surveillance system to control and monitor the market activities particularly regarding the scrip traded. Surveillance Department keeps a close watch on price-movement of scrip; detect market manipulation and monitor abnormal prices and volumes, which are not consistent with the normal trading system. The activities of this department are mentioned here in below-
Circuit Breaker Control
Circuit breaker is a common and widely used system across the Stock Exchange worldwide to control the abnormal fluctuations of share prices. The limit of Circuit Breaker at Dhaka stock Exchange is mentioned in this report while discussion the activities of market Operation Department. Presently, the following rules govern the Circuit Breaker percentage value or absolute circuit breaker value:
- In case of disclosure of news in any scrip, the circuit breaker percentage will be changed to a Market Operations specified value and will persist at this value for a specified number of days.
- For new scrip, for specified number of days after the first trading day, the percentage is a Market Operations specified value. Till the first trading day for that scrip, there will be no circuit breaker percentage.
- In case of book closure, the Exchange will provide an absolute value of circuit breaker, which will be used for a Market Operation specified number of days, following which it will revert back to the old value of the circuit breaker.
Suspension of Scrip:
When price rigging can’t be controlled even after applying the existing surveillance measures or if any serious irregularities such as large quantity of bad deliveries, circulation of fake share certificates in the market etc. is noticed in the market Exchange can suspend trading of those scrip for a period depending on the situation.
Surveillance Department of the Exchange on a day-to-day basis carries out a thorough study of the trading pattern of the top 10 scripts by turnover. Such analysis covers the price, turnover volume and value activity by various members in each of the scripts and also the fundamentals of the Company.
Monitoring newly listed shares
As per the instruction of SEC circuit breaker is not applied to the newly listed shares for the first five market days. Trading pattern in this five days of the newly listed shares are analyzed by this department to detect whether the members have entered into any manipulation or circular trades to artificially prop-up or prop-down the prices. If any certain irregularities are observed, the Disciplinary Committee takes action against such member.
Suspension of Traders/Brokers
Depending on seriousness of irregularity noticed in a member’s trading, his/her trading terminal is suspended until such time the issue is resolved.
The other activities of this department are:
- Watching net high-low position.
- Taking Disciplinary Action.
- Investigation into specific deals of Broker/Dealers.
The surveillance functions are conducted through the surveillance module of the computer system. This system usually runs manually. The surveillance department through its wide information source carries out this function.