In a digital world, Bangladesh’s stock trading remains defiantly analogue

One would think that the ability to conduct stock trading online would take off like a rocket, given the immense convenience the facility offers. But, the initiative, which was launched four years ago, failed to capture the imagination of retail investors.

Not that the platform is exculpated from all blame for the lukewarm response. A host of problems that were present during launch are yet to be fixed.

Launched on March 9, 2016, the DSE Mobile app and its desktop version DSE-Investor managed to find 53,307 takers, which is 2.07 per cent of the total beneficiary owner's (BO) accounts of 25.74 lakh now, according to data from the Dhaka Stock Exchange.

One of the glitches of the platform is that it has no price modification option, said Masum Ahmad, a stock investor.

Every time he wants to modify the trading price, he has to cancel the order and start over.

Options have not been incorporated for stop-loss order, which is an order placed with a broker to buy or sell a security when it reaches a certain price.

Notifications are also not showing up now.

"For example, I am following a bank that is currently trading at Tk 30 and I want to be notified when the price will fall below Tk 28. But I don't get any such notification," said Ahmad, who is an accountant at a private firm.

But initially, he used to get such notifications.

Were the online trading platform a well-oiled machine, the stock market could have run smoothly amidst the countrywide shutdown, Ahmed added.

Bourses had remained closed for two months since March 29.

"We cannot restrict short selling if a client trades on both the stock exchanges as the bourses are not linked up with each other," said an official of a stockbroker, which is a subsidiary of a state-run bank.

Short selling occurs when an investor borrows a security and sells it on the open market with the plan to buy it back later for less money.

The premier bourse has failed to address the problems in the last four years, he added.

There are other risks and hassles with the online trading platform.

"When an investor trades via the online trading platform, we cannot stop them from buying non-marginable securities at a margin," said a top official of a brokerage house, asking not to be named.

Investors cannot be barred from buying A, B, G and N category shares by selling junk stocks on the same day though rules do not permit this, he added.

Online trading cannot restrict the purchase of stocks in the spot market with the proceeds generated from sales in the normal market on the same day, he said. In the spot market, securities are sold in exchange for cash instantly.

If investors do something wrong while executing a transaction through the online trading system, the regulator holds the brokers responsible, the official said.

"Why should brokers take this responsibility? We are held responsible for the clients' wrongdoings, so we decided not to give them the online trading facility," he added.

DSE Managing Director Kazi Sanaul Hoq did not reply to messages and phone calls from The Daily Star for a comment on the matter.

But a top official of the Bangladesh Securities and Exchange Commission said on condition of anonymity that they have already asked the DSE to fix the problems. 

"The entire trade settlement process cannot be made automated yet. We're working on it."

However, the BSEC official said many investors still prefer to come to the brokerage houses or call brokers over the phone to execute trades.