Yet another SEC measure to bring back market stability
The regulator now moves to bring more stability in the stock market. From Sunday it will hold one-to-one meeting with leading merchant banks and brokerage houses.
“At the one-to-one meeting we will discuss with merchant banks and brokerage houses how the market could be stabilised further,” said Farhad Ahmed, executive director of Securities and Exchange Commission.
The SEC took the decision yesterday at an internal meeting, presided over by its chairman Faruq Ahmad Siddiqi, following the finance minister's pledges on market monitoring.
Finance Minister Abul Maal Abdul Muhith on Monday informed the Parliament of some 'realistic and effective steps' of the government to improve the capital market situation.
In response to a lawmaker's query, Muhith said a surveillance is being reinforced to protect investors' interests through identifying any market manipulation, checking any cheat in raising and reducing prices of shares and violation of laws.
He also said the government has constituted a high-profile committee to monitor Bangladesh's capital market, as it takes up a plan to check any fallout from the US share market crash.
Meanwhile, the SEC is also mulling allowing merchant bankers and retail investors for making joint portfolio investments on profit or loss sharing basis.
The existing securities rules put an embargo on such joint investment.
“We will take a decision in this regard in our next meeting,” the SEC executive director said.
During any volatile situation it was found that the investors or clients borrowing from merchant banks went for panic sell-off, even at losses for loan adjustment. However, the clients were off and on under pressure from these banks for such sell-off.
In case of any joint portfolio investment, fundamentals of a company will come under perusal of merchant bankers prior to making any investment, the senior official of the regulator pointed out.
Earlier, a consultative committee also recommended such an investment, a precondition to launching an Islamic product in bourses.
The SEC has also started gathering preliminary information why the market behaved so roughly or, if there was any ill motive behind the bearish trend in the market last week.
“If we find any person or institution behind the last week's scene, we will take necessary actions against them,” Farhad Ahmed said.