KARACHI: Securities and Exchange Commission of Pakistan (SECP) has identified false trading by Sindh Bank Limited (SBL) and warned the bank against such activities in future.
The SECP said that with reference to correspondence exchanged between SECP and the bank regarding various trades carried out by SBL in ready market during the period from January 2020 till January 2021 in the shares of several companies.
“Upon detailed review of trading data, it was observed that large quantum of trades carried out by SBL during the aforesaid period in ready market was matched with the proprietary accounts of brokerage houses through with it was trading.
“In the said transactions, SBL first sold and then on the next day bought those shares back of approximately same quantity and at either the same rate or slightly higher rate, wherein, counterparty on buy and sell trades was proprietary account of the same brokerage house.”
The SECP said that the aforementioned pattern of trading as explained above may lead to false trading which is not in the interest of investors trading in the securities market. Therefore, representatives of SBL were called for a meeting to explain the rationale for carrying out such trades in ready market, wherein, they explained that such transactions were called out only for the purpose of realization of gain/loss in the securities held by the SBL.
The pattern of trading adopted by the SBL may be detrimental for a fair and transparent trading in ready market where trading volumes in listed companies are generated based upon genuine demand and supply mechanism.
The SECP prohibited the bank from engaging in the said pattern of trading in the ready market or any other such arrangements which may affect the integrity of stock market.
The SECP also warned all securities brokers of facilitating such transactions in the ready market.
