Raihan M Chowdhury

The automated trading system of Dhaka Stock Exchange (DSE) has failed to operate successfully because of its 'poor capacity', market operators and investors said.

Apart from financial losses, the chronic problem has created risks of settlement failure and 'short selling' for the brokers.

Visiting a good number of brokerage houses of the DSE in recent weeks, the FE correspondent found disruption and anomalies in the daily trading system because of the 'technical problem' of the system installed in the second half of 1998.

The technical glitches became so severe in a recent trading in a brokerage house at Motijheel in the city that a buy order of Grameen-2 was shown as Aftab Automobiles by the TESA report of DSE.

The closing price of Aftab Auto and Grameen-2 were Tk 1277.00 and Tk 46.50 respectively on that day. However, the officials of the brokerage house solved the problem with the emergency support from the DSE IT department.

"We always remain under such panic…and we are losing investors' confidence just due to such problem," a DSE member said.

DSE, however upgraded the system several times since 2005 wasting huge amount of money but failed to serve the investors to have a fool-proof system as the management failed to forecast the growth of the market.

The latest up-gradation became effective on March 27, 2008.

"The IT support of DSE is now very crucial as the present volume of share transaction is much more higher than any of the previous periods and the market will see tremendous inflow of new shares due to approval of big IPOs like Grameenphone (GP) and issuance of bonus and rights shares by the listed companies," said a market operator.

The GP alone is set to issue shares worth 65 million dollar in the stock market, the ever highest in the history of the country.

DSE's trading volumes have grown exponentially in the last 3-5 years and averaging about 130,000 trades per day.

DSE is running its online trading using TESA application under Tandem HW, supplied and supported by Cambridge Solutions Ltd, India.

DSE must have an own online trading system to cope with the huge trade surge, instead of the present rental system, market operators and investors demanded.

DSE now gets network service from 5 network service providers (NSPs). They are X-Net Ltd, DhakaCom Ltd, Royal Green Online Ltd, Ranks ITT and Link3 Technologies Ltd.

"Apart from DSE, these NSPs are engaged with other clients like banks, corporate houses and cyber cafes, that's why their capacity is very much restricted to fulfil the complete demand of the growing stock market," a DSE market operator pointed out.

A total of 334 branches of 205 DSE members located in and outside Dhaka and divisional towns are now facing such problems every trading days.

Apart from Dhaka city, DSE has expanded its automated trading network to Chittagong, Sylhet, Khulna, Barisal, Bogra, Rajshahi, Comilla and Feni.

DSE has also trading connectivity at Narayangonj, Tongi and Savar.

"Aggrieved investors are reacting angrily every day whenever the online disruption occurs at my Comilla branch," a DSE member said.

"My company is fully ready to expand the brokerage house business, but I am concerned how successfully we will be able to run the operations because of poor IT support," said Mafizuddin Sarker, managing director of LankaBangla Finance.

LankaBangla Securities, a subsidiary of LankaBangla Finance remains the top broker of both DSE and Chittagong Stock Exchange (CSE) for the last few years.

It is alleged that a sub-committee of the DSE to develop the IT support consists of some members who are at all not capable on the core subject.

DSE IT Department says that massive use of 'clone PCs' are responsible for such disruption but brokerage houses argued that DSE never made it mandatory to use 'brand' PCs.

When contacted, a senior DSE policymaker, however said that a DSE committee is 'working very seriously' on the issue.

Meanwhile, the DSE website remains non-updated as far as the dates of last annual general meetings (AGMs) of listed companies is concerned confusing the investors to take informed decision ahead of investment.

The DSE website mentioned that BRAC Bank, Shahjalal Islami Bank, Bangladesh Industrial Finance, LankaBangla Finance, ICB Islamic Bank, International Leasing and Eastland Insurance held their last AGMs on April 24,2008, May 4,2008, May 14, 2008, May 19, 2008, June 30,2008, April 24,2008 and May 27, 2008 respectively.

But all the companies held their last AGMs this month (May). Of them BRAC Bank, Shahjalal Islami Bank, Bangladesh Industrial Finance, LankaBangla Finance, ICB Islamic Bank, International Leasing and Eastland Insurance held their last AGMs on May 17, May 21, May 20, May 5, May 10, May 20 and May 25 of this year (2009) respectively.

"It is ridiculous that the website of the country's prime bourse is carrying such 'trash information' of listed companies," Md Iqbal, an investor told the FE.