External Capital Structures for Managing Oil Price Volatility: The
Volatility in capital market of Bangladesh
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Transcript of Volatility in capital market of Bangladesh
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Volatility InCapital Mark
et
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Stock Market
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1996 &
2010-2011
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Post Mortem
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Stock Market
Investors Market
Ownership
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Stock Market Crash
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Big Anomalies
1929 & 2008
1991 1996 & 2011
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Bangladesh Stock Market
DSE CSE BSEC
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1996
Paper Share
No Circuit Breaker
Bull Run
November 6, 1996
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1996
Bubble Burst
Decreasing trend for 7 Years
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Reason behind the 1996 Crash
Manipulation
Inside Information
Failure of Market Regulators
DVP Sysem
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Reason behind the 1996 Crash
Information Inefficiency
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Steps Taken after 1996 Crash
Legal Action
CMDP
Automated Trading System
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2010-2011 Crash
Inception of the Bubble
Dramatic increase of Share Price
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Timeline of 2010-2011 Crash2010
8th December 2010
19th December 2010
January 2011
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Factors Contributed 2010-2011 Crash
Role of Market Regulators
Demutualization of Exchanges
Investment of Bank
Pre IPO and IPO Process
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Factors Contributed 2010-2011 Crash
Uniform Face Value of Share
Placement Trade
Omnibus Account
Asset Revaluation and Rumor
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Factors Contributed 2010-2011 Crash
Book Building Method
Serial and Artificial Trading
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Comparison2011 1996Trading was automated Trading was not automatedSurveillance was strong Surveillance was weakCircuit breakers and international protections were in place
Circuit breakers and international protections were not properly in place
Being automated there were no forged shares traded and the kerb market
Being not automated there were forged shares traded and the kerb market
There were also omnibus accounts in the market
There were no omnibus accounts in the market
The BO account value was 35 lacs Compared to 3 lacs before2011 crash was an asset bubble The 1996 crash was a result of a
speculative bubble
In 2011 it lost up to 660 points 1996 the index lost 232 points
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Recommendation
Development of Rules Margin Loan DecisionSponsor DirectorBook BuildingExposure
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Recommendation
Role of RegulatorsHonestyProhibition of Insider TradingConversion of Omnibus
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Recommendation
Role of GovernmentLegal ActionSecurity LawsBalancing Demand and SupplyProtecting from Manipulation
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Thank YOU