Trade in cement manufacturer's shares: regulators raise eyebrows on 'substantial volatility'

A "substantial volatility" in the current and futures trading volumes and price of Dewan Cement Limited (DCL) raised eyebrows of the regulators at Securities and Exchange Commission of Pakistan (SECP). Over the last week, during May 2-10, the number of DCL shares traded ranged between 3.31 million and 59.56 million. The given dates showed trade in the cement manufacturer's future contracts settling in the range of 1.32 million and 18.82 million.
Also, the SECP observed volatility in the price of cement scrip shares trade which were seen appreciating to Rs 16.45 in intraday trade. In futures trade, the DCL price went up to Rs 16.5 level. "While reviewing the trading data of DCL at the Karachi Automated Trading System (KATS), it has been observed that the trading volumes of DCL as well as DCL-MAY (futures) over the last week have experienced volatility," a stock filing quoted Yaser Manzoor, director surveillance at SECP, as telling DCL management.
The outgoing week, from May 9 to 13, saw over 157 million shares of DCL changing hands at the ready-counter. The cement scrip, throughout the week, remained on the list of 10 most-traded stocks on a day. On the list, it clinched 3rd position Monday, 1st Tuesday, 2nd Wednesday, 6th Thursday and 1st Friday (today). This rally took place, what SECP official Yaser noted, without a trigger, mostly the dissemination of price-sensitive material information by the company.
Titling "Trading volume and price of DCL and DCL-May", the SECP notice asked the company to clarify the abnormal movement in the price and trading of its listed shares. "In the absence of any announcement from the company, you are required to clarify the reason for the substantial volatility," said the regulator. The Commission, in its May 11 notice, asked the company to furnish its comments under section 97 of the Securities Act, 2015 "immediately".
Also, it said the clarification from DCL about any said speculation/rumours may be disseminated to Pakistan Stock Exchange before opening of the trading session. The cement firm, in its response to SECP's notice on Monday, May 12, attributed the pointed volatility to shareholders/traders seeking "personal benefits". "You are aware that many shareholders/traders for their personal befits circulate rumours and speculation in PSX market," said Muhammad Hanif German, DCL's company secretary. DCL, the official said, had "no control" over such price-sensitive malpractices. "We hereby confirm that we have nothing to do with the treading volume in Dewan Cement Limited shares in recent past," reads the stock filing jointly signed by German and Director Haroon Iqbal.