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CSE Proposes Scrip Netting to Boost Liquidity

Industry: Stock Market
Company: Chittagong Stock Exchange (CSE)
Company Intelligence Tag: Business Insights

The Chittagong Stock Exchange (CSE) has proposed the reintroduction of intraday same-scrip netting to stimulate liquidity in the market and boost trading activity. This proposal, submitted to the Bangladesh Securities and Exchange Commission (BSEC), aims to increase the daily turnover of the CSE, which has recently faced a significant decline in trading volumes due to the imposition of floor prices.

Scrip netting would enable investors to take positions in a security during a trading session without waiting for share maturity. Net positions would be settled at the end of the day with the broker, simplifying transaction costs and settlement obligations. This change is expected to increase the number of orders, leading to a higher share supply and potentially reducing bid-ask spreads.

The CSE’s daily turnover has been considerably lower than that of the Dhaka Stock Exchange (DSE), making operations challenging for many CSE brokers. The proposal is currently under examination by the securities regulator and may initially apply to A and B-category securities. The reintroduction of scrip netting could revitalize trading and improve market dynamics in the CSE.

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