BSEC approves intraday trading to boost market liquidity

The Bangladesh Securities and Exchange Commission (BSEC) has approved the introduction of “Scrip Netting”, commonly known as intraday trading, in a move aimed at increasing market liquidity and modernising the country’s capital market.

The decision was taken at a commission meeting today (14 July), paving the way for the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) to introduce the facility after completing necessary technical and risk-management preparations.

Under intraday trading, investors will be able to buy and sell the same security within a single trading session, allowing them to adjust their positions more quickly. The move is expected to increase trading activity, improve market efficiency and attract more investors.

The BSEC approval comes with the condition that stock exchanges ensure all required risk-management measures and technical arrangements are in place before launching the facility.

A senior DSE official told The Business Standard that the exchange plans to initially introduce the facility on a pilot basis for companies listed under the blue-chip DS30 index.

However, several technical and operational challenges need to be addressed before the system becomes operational.

The DSE will have to upgrade its trading system’s matching engine, which is provided by Nasdaq, as the existing software does not support same-day trade netting.

“The DSE will have to send a formal change request to Nasdaq to modify the system requirements to support this mechanism,” the official said.

Besides technological upgrades, the DSE will also need to review broker margin requirements to manage increased buying and selling pressure expected from intraday trading.

Another major concern is the lack of integration between brokerage firms’ back-office software and the systems of the DSE and Central Depository Bangladesh Limited (CDBL).

Market experts warned that without proper integration, there is a risk of misuse of the facility through inaccurate or fabricated data entry by brokers.

To address the issue, the DSE is working on developing integrated software that would allow real-time monitoring of broker activities, according to the official.

Scrip netting was previously allowed in Bangladesh’s stock market but was discontinued years ago following allegations of misuse and weaknesses in the trading system.

The regulator believes the reintroduction of intraday trading, with stronger monitoring and technological safeguards, will help improve market depth and liquidity.