Easy access to company data will check stock manipulation

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Chinese stock exchanges ensure every data of listed companies is available to investors in order to guarantee transparency and avoid manipulation, said a top official the Shenzhen Stock Exchange (SZSE).

“This is because data has the capability to tackle market manipulation and insider trading. Our exchange is working like a manufacturer of data,” said Liu Fuzhong, a director of the SZSE, last week. 

Even the speeches and interviews of corporate executives as well as every piece of information of a listed company are made available for investors, who can view them by visiting a website, he said.

Now, a Chinese consortium comprising the SZSE and the Shanghai Stock Exchange is working with the Dhaka Stock Exchange (DSE) to improve data management system of Bangladesh’s premier bourse with a view to giving a clear picture of listed companies to investors.

The Chinese consortium became the strategic partner of the DSE last year by purchasing 25 percent stake. Fuzhong played an important role on the Chinese part to become the strategic partner.

He said data management system, data disclosure system and accessibility of data to stock investors—all are part to enhance transparency.

“If we have very good technology and we are able to identify irregular behaviours, we can give out treatment accordingly. This will establish integrity in the stock market.”

Manipulation and insider trading could be diminished or reduced by upgrading technology and data management capacity of the DSE, he hoped.

Fuzhong, however, says a market can’t get rid of all the problems. “But as a market operator, an exchange needs to tackle problems by upgrading technologies as much as possible,” he said during an interview at his office at the SZSE in China.

To deter insider trading, the SZSE preserves personal data related to beneficiary owners’ accounts, bank accounts and national identification number of all sponsors and officials.

“If any suspicion arises, we verify all of their movements to find out whether there is any insider trading or not,” he said. 

The SZSE educates people using internet and mobile phones and has developed a system for investors so that they can get data of listed companies and analytical tools through mobile phones.

“We give them very simple analytical tools so that they can take investment decision very easily. We also give them an opinion gathering platform, where they can share their views and get answers from the stock exchange and listed companies.”

For example, investors can ask a listed company a question. The SZSE reviews the queries and sends them to the company. After receiving replies from the listed company, the exchange reviews them again before forwarding them to investors.

“Now mobile trading has become a fashion at the SZSE.”

More than 90 percent of the trading on the exchange take place through internet-based platforms, with most of them through mobile phones.

Fuzhong said many people blame the liquidity crisis for the bearish trend of the Bangladesh stock market.

“I think once you have good market environment and people are hopeful about investment, liquidity will continue to increase.”

According to Fuzhong, the Chinese capital market had also faced problems in its initial stage. People were not satisfied with governance of listed companies and the quality of trading behaviours.

The SZSE tackled the problems by upgrading trading and surveillance systems and disseminating information about good trading behaviours and good corporate governance.

“It’s been a consistent effort over the past 20-30 years in educating the market, enhancing surveillance system, and utilising the data and other sources of information.”

“So, it is important to focus on increasing people’s technical capability and data analytical ability to understand the market and take measures appropriately.”

When people have easy access to the data of listed companies, their decision-making will be easier and it will reduce many problems of the market, said Fuzhong, who obtained master’s degree in management from the London School of Economics.

The Chinese consortium is trying to make breakthrough in some areas of the DSE, including introducing a new index.

The index teams of the DSE and the SZSE are closely working together so that they can unveil a new index by the end of the year. The new index will allow Chinese investors to have a better understanding of Bangladesh’s stock market.

“It is important to present the opportunities of the Bangladesh market to Chinese investors with information and data.”

The consortium has already organised two seminars in China to introduce Bangladeshi companies among Chinese investors. “Some investors are trying to explore the Bangladeshi market.”

An SZSE technological team is also working to implement new technologies at the DSE. The Bangladesh window of the V-Next platform of the SZSE and an SME Board have already been set up.

“We have submitted all of our plans on technology transfer to the DSE, but it is not so easy to transfer and adopt a new technology overnight.”

He said every stock exchange has its own legacy, so any change in technology adjusting the legacy takes time.

“So, we are working on functionality, scope and capability of new technologies at the DSE.”

The SZSE is satisfied with the performance of the Dhaka bourse, he said. 

“We are not profit-making exchange; rather it is a member-based exchange. Our vision is not making profit; our vision is to develop an exchange and strengthening partnership.”
Source: https://www.thedailystar.net

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