Back-office software used by brokers under BSEC scanner

Back office software used by brokerage firms has come under a regulatory scanner for stopping possible data manipulations.

To strengthen its surveillance on stock market transactions, the Bangladesh Securities and Exchange Commission (BSEC) on Sunday instructed the bourses to take necessary actions by June 30 regarding the use of back-office software by the stockbrokers.

The instruction comes months after irregularities were unearthed at several brokerage firms including Tamha Securities, Banco Securities and Crest Securities.

Stockbrokers have allegedly used more than one back-office software--one for the regulators, and another for their clients, to manipulate data, sources said.

“If companies use more than one back-office software, the exchanges will ask for an explanation,” said the BSEC in a letter sent to the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).

The exchanges will conduct spot inspections of the said TREC [Trading Right Entitlement Certificate] holder companies, according to the letter.

Vendors which provide back-office software to the brokerage firms need to obtain permission from the DSE and CSE exchanges before the supply of software to any TREC holder company, and subsequently, exchanges will inform the commission after giving such permission, according to the letter.

The BSEC also directed to frame a hardware and software installation policy to bring the back office software vendors under the regulation, according to the letter.

The stock exchanges were also ordered to formulate a backup policy for preserving daily trade data of TREC holder companies and merchant banks in a separate seismic zone.

Tamha Securities Ltd was fined Tk, which duped its clients and embezzled around Tk 87 crore.

In December 2021, the DSE suspended trading operations of Tamha Securities for bilking them out of more than Tk 87 crore.

For a similar offence, the operations of Crest Securities and Banco Securities were suspended. In June 2020, the owners of Crest Securities Limited went into hiding after allegedly embezzling Tk 48 crore of clients’ money.

On June 14, 2021, the DSE suspended operations of Banco Securities for alleged misappropriation of Tk 66 crore from the customers’ accounts.