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The securities regulator has ordered a sweeping investigation into three listed companies following "abnormal price movements and trading behaviour" on the country's premier bourse.
The Bangladesh Securities and Exchange Commission (BSEC) has ordered the Dhaka Stock Exchange (DSE) to probe the trading patterns of Bangladesh National Insurance Company Limited, Shyampur Sugar Mills Ltd, and Sonargaon Textiles Ltd. It has issued three separate directives in this regard.
The DSE has been given 30 working days from the issuance of the orders on Monday to submit its comprehensive findings.
A market data analysis explains why the regulator took the action.
The share price of Bangladesh National Insurance Company escalated 115.8 per cent to Tk 116.10 between March 26, 2024 and June 9 this year.
This massive upward climb prompted the BSEC to look into whether a syndicate had been driving non-genuine trade practices or leveraging unpublished price-sensitive information.
In another dramatic development on Monday, the DSE suspended the share trading of Sonargaon Textiles just two hours into the session, suspecting speculative trading.
In a stock exchange filing during trading hours, the DSE stated that trading in the company's shares had been halted for the rest of the day due to an "abnormal price hike coupled with a significant rise in trading volume."
Market data shows that Sonargaon Textiles' share price more than doubled over the past month, reaching Tk 87.50 on Monday. The stock surged 9.97 per cent at the opening of trading on Monday alone before regulators pulled the plug.
The enforcement actions lay out identical Terms of Reference (ToR) aimed at rooting out deeply entrenched market irregularities. Investigators have been mandated to identify coordinated practices, detect insider trading and examine margin rule compliance across all three counters.
While the probes into the insurance and textile companies focus broadly on velocity, the directive on Shyampur Sugar Mills explicitly names specific market intermediaries.
The DSE has been instructed to scrutinise the specific roles of Baraka Securities Ltd. and Smart Shares & Securities Limited to determine if they facilitated or failed to prevent suspicious trades.
The trade suspension of Sonargaon Textiles came days after the DSE took similar action against Shyampur Sugar Mills over an extraordinary price surge. That suspension was lifted after the company informed the exchange that there was no undisclosed price-sensitive information behind the rally.
As trading in shares of Shyampur Sugar Mills resumed on Sunday, a massive sell-off was observed. The stock plummeted 8.75 per cent to Tk 218 per share amid heavy selling pressure. The downward spiral continued into Monday, with the stock falling a further 7.34 per cent to close at Tk 202.
To ensure a foolproof investigation trail, the BSEC has also directed the Chittagong Stock Exchange (CSE) to provide necessary support by sharing its transaction data for the relevant trading periods for the dual-listed firms.
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