The Bangladesh Securities and Exchange Commission (BSEC) has asked the Dhaka Stock Exchange (DSE) to investigate unusual trading in the units of EXIM Bank 1st Mutual Fund after the fund's price more than doubled within a month alongside a sharp spike in trading volume.
In a letter issued on Monday, the securities regulator said it had observed abnormal price movements and trading behaviour in the units of the closed-end mutual fund, traded on the DSE under the ticker EXIM1STMF.
The BSEC instructed the bourse to carry out a detailed investigation to determine whether the transactions involved coordinated, manipulative or non-genuine trading practices, as well as any prohibited insider trading through the misuse of unpublished price-sensitive information.
The directive came after the fund's unit price surged from around Tk 3.40 on July 5 to Tk 6.90 on August 2, marking a gain of 102.9 per cent in less than a month.
Trading activity also rose sharply during the period. Daily turnover increased from 408,014 units on July 6 to 13,102,957 units on July 30 -- an increase of more than 32 times, coinciding with the steep rise in the fund's market price.
The regulator asked the DSE to identify any coordinated, manipulative or non-genuine trades and detect any prohibited insider trading.
The investigation will also examine whether the stockbrokers and stock dealers involved complied with the BSEC's margin rules, relevant notifications and regulatory directives.
In particular, BSEC asked the DSE to determine the role and responsibilities of the concerned stockbrokers, stock dealers and their authorised representatives in facilitating, or failing to prevent, the suspicious trades. The letter specifically referred to the involvement of Agranee Securities Ltd.
The DSE has also been instructed to identify any other irregularities related to trading in the fund's units and submit a comprehensive investigation report within 30 working days from the date of the letter.
Separately, the BSEC directed the exchange to raise awareness among authorised representatives, compliance officers and chief executive officers of stockbrokers and stock dealers about suspicious trade execution that may constitute violations of securities laws and regulations.
The regulator's investigation will seek to determine whether the extraordinary surge in the fund's price and trading volume reflected genuine investor demand or was driven by coordinated or otherwise prohibited trading activities.
The probe is expected to examine transaction-level data, including the trading patterns and identities of the investors, brokers and authorised representatives involved in the recent activity.
