The Bangladesh Securities and Exchange Commission has asked the Dhaka and Chittagong stock exchanges to investigate 148 cases of short selling conducted by stockbrokers in last two months.
The regulator’s surveillance system detected the wrongdoings in June and July this year.
The BSEC on Wednesday issued separate letters to the chief regulatory officers of Dhaka Stock Exchange and Chittagong Stock Exchange to look into the unlawful activities.
The capital market regulator in its letter asked the bourses to submit investigation or inquiry reports on the cases within 20 working days.
The DSE and the CSE were also asked to report on how those transactions were settled at the bourses.
Short selling is a type of sales of securities not owned by the seller. Under the existing rules and regulations, none except the market makers are allowed to make any short selling.
The capital market regulator from June to July this year detected through its instant market watch surveillance system 148 alerts relating to short selling of securities.
Of the alerts, stockbrokers of the DSE made 108 cases of short selling of different securities, while CSE brokers conducted 40 cases of short selling.
According to officials of the bourses, the stock exchanges usually purchase shares from the open market to settle any short selling.
In that case, the seller has to pay the DSE the money that would be required for purchasing the shares of the scrip, they said.
The commission earlier in a letter to the bourses said that the regulator would open separate desk for prompt investigation into short-selling reports to be provided by the bourses.
A BSEC official said that the commission had been trying to prevent any sort of manipulative activities and the surveillance system of the regulator had been generating a huge number of alerts in this regard.
Short selling is among the activities which can distort usual movement of the market as it creates additional share selling pressure, he said.
In most of the cases, stockbrokers/dealers claim such share sales as unintentional mistake.
The BSEC, however, takes action considering the gravity of its impact over particular scrip, the BSEC official said.
The regulator even takes punitive measures against brokerage firm concerned for such activities, he added.