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Volatility InCapital Mark
et
Stock Market
1996 &
2010-2011
Post Mortem
Stock Market
Investors Market
Ownership
Stock Market Crash
Big Anomalies
1929 & 2008
1991 1996 & 2011
Bangladesh Stock Market
DSE CSE BSEC
1996
Paper Share
No Circuit Breaker
Bull Run
November 6, 1996
1996
Bubble Burst
Decreasing trend for 7 Years
Reason behind the 1996 Crash
Manipulation
Inside Information
Failure of Market Regulators
DVP Sysem
Reason behind the 1996 Crash
Information Inefficiency
Steps Taken after 1996 Crash
Legal Action
CMDP
Automated Trading System
2010-2011 Crash
Inception of the Bubble
Dramatic increase of Share Price
Timeline of 2010-2011 Crash2010
8th December 2010
19th December 2010
January 2011
Factors Contributed 2010-2011 Crash
Role of Market Regulators
Demutualization of Exchanges
Investment of Bank
Pre IPO and IPO Process
Factors Contributed 2010-2011 Crash
Uniform Face Value of Share
Placement Trade
Omnibus Account
Asset Revaluation and Rumor
Factors Contributed 2010-2011 Crash
Book Building Method
Serial and Artificial Trading
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
Recommendation
Development of Rules Margin Loan DecisionSponsor DirectorBook BuildingExposure
Recommendation
Role of RegulatorsHonestyProhibition of Insider TradingConversion of Omnibus
Recommendation
Role of GovernmentLegal ActionSecurity LawsBalancing Demand and SupplyProtecting from Manipulation
Thank YOU
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