SEC under fire, moves to probe market swings
Finance Minister AMA Muhith yesterday directed the Securities and Exchange Commission (SEC) to find out big sellers in the unstable share market and investigate any probable manipulation.
Muhith rushed into a meeting with high officials of SEC and Bangladesh Bank at his home in Dhaka, searching for answers to the lingering market volatility.
The SEC was criticised for its apparent failure to control heavy market downswings that sent thousands of angry investors out on the Motijheel Street.
The meeting came after the market volatility forced the SEC to shut the bourses twice in eight days. The central bank governor and the SEC chairman were not present at the meeting.
Participants of the meeting decided to introduce an index-breaker to the share market which was immediately approved by SEC.
Officials who attended the meeting said the SEC was asked to find out who sold most of the shares in the capricious market and whether there were any irregularities.
The SEC will launch a full-fledged investigation into anomalies on the basis of a surveillance report. SEC officials said they would also sift through information about share transactions.
The SEC was also asked to recommend mid- and long-term measures to maintain the stability in the share market.
The central bank rejected a proposal which suggested cutting some slack in its monetary policy. It said there is no scope for relaxing the monetary policy as it must keep the banks risk-free and check rising inflation.
The central bank has been following a tight monetary policy from last year to control inflation and cut banks' exposure to the share market.
At yesterday's meeting, the finance ministry and BB officials criticised the role of SEC and said shares would not have been overvalued, if the SEC had played its role properly.
The central bank gave the Investment Corporation of Bangladesh (ICB) Tk 400 crore in two instalments in the last two days to stabilise the capital market. The meeting discussed whether BB can supply more funds to ICB or state-owned financial institutions.
However, BB officials told the meeting that International Monetary Fund (IMF) has already raised questions about the Tk 400 crore funds given to ICB.
Two officials of BB and SEC told The Daily Star that liquidity was no problem in the share market, but low investor confidence was.