Market Abuse is a broad term which
includes abnormal price/volume movement, artificial
transactions, false or misleading impressions, insider
trading, etc. In order to detect aberrant behavior/
movement, it is necessary to know the normal market
behavior--
The department carries out investigation, if necessary,
based on the preliminary examination/analysis and suitable
actions are taken against members involved based on
the investigation.
All the instruments traded in the market come under
the Surveillance umbrella of DSE.
Surveillance activities at the Exchange are divided
broadly into two major segments --
Position Monitoring
The Surveillance Department closely
monitors outstanding exposure of members on a daily
basis. For this purpose, it observes various off-line
and on-line market monitoring reports. The reports are
scrutinized to ascertain whether there is excessive
purchase or sale position build up compared to the normal
business of the member, whether there are concentrated
purchases or sales, whether the purchases have been
made by inactive or financially weak members and even
the quality of scrips is considered to assess the quality
of exposure.
The following key areas are examined
to assess the market risk involved--
Online monitoring of Brokers
Position
Surveillance closely
monitors brokers gross turnover exposure for ensuring
margin calls in time.
B/S Statement of Trading Members
Scrutinizing the statement on daily
basis. It is for keeping a watch on the exposure of
the members & ascertain the quality of exposures.
A detailed report on the net outstanding
positions of top purchasers and top sellers in individual
scrips, is prepared, if considered necessary.
Concentrated B/S
It is considered a risky issue. In case,
such a situation is noticed, fundamentals of the scrips,
their daily turnover, their nature of transactions are
ascertained. Thereafter, based on the market risk perception
appropriate surveillance actions are taken.
B/S of scrips having thin trading
It is closely scrutinized as comparatively
high market risk is involved in trading in such scrips.
Details of trades in such scrips, if necessary, are
called from members to assess the market risk involved
& decide on the appropriate surveillance action.
Verification of Institutional
Trade
The institutional trades executed by
the trading members are verified to ascertain the genuineness
of trades.
Verification of Foreign Trade
The foreign trades executed by the trading
members are verified to ascertain the genuineness of
trades.
Verification of Cross Reporting
Trade
The report crossing trades executed
by the trading members are verified to ascertain the
genuineness of trades.
Verification of Dealers own
trades
Trades executed by the trading members
(Dealers) are verified to ascertain the genuineness
of trades.
Verification of Sponsor's Trade
The Sponsors trades executed by the
trading members are verified to ascertain the genuineness
of trades.
Snap Investigation
To carry out, wherever considered necessary,
preliminary investigation of certain dealings to verify
irregularities. Further actions, viz., referring the
case for detailed investigation, referring the case
to the Sec, depending on the findings of preliminary
investigation.
Market Intelligence
The rumors floating in the market are
verified with the data available with DSE,Newspapers,
Television news channels & Reuters to ascertain
the national & global factors affecting the market
sentiments. This enables the Exchange to avert market
problems before it causes a serious damage.
Review Block Trades
To determine --
Verify Company Accounts
To scrutinize company announcements,
company reports, auditors qualifications & other
notes of special interests in the published accounts
of such company
Review Media Information
To scrutinize press articles or other
media on the daily basis, the news relevant to the share
prices of companies.
Monitoring on Newly Listed Stock
To review all activities of a newly
listed stock for the first 1 / 2 weeks to identify any
abnormal deal.
Develop Good Liaison
To develop & maintain good liaison
with staff members of SEC & listed companies &
member firms as well.
Develop market contacts &
to pick up Intelligence.
