DSE’s pre-opening, post-closing sessions to go live this month

KEY TAKEAWAYS

• Final intro of the new sessions is subject to BSEC's nod
• Currently, trading in DSE begins at 10am
• Investors can place trade orders from 9.45am to 10am
• Opening price will be the price at which most trades are executed
• DSE post-closing session will begin at 2.30pm
• CSE has been running both sessions for the last 2 decades

Following the awareness sessions aimed for stakeholders, the Dhaka Stock Exchange (DSE) is planning to show live its pre-opening and post-closing sessions before 19 November this year.

The premier bourse in a statement on Tuesday said the plan for final introduction of the new sessions is subject to the securities regulator's nod and the DSE would communicate all the developments with Bangladesh Securities and Exchange Commission (BSEC) before that.

According to the DSE, the pre-opening session would be a 15-minute show and the post-closing session only 10 minutes. Currently, the bourse begins its trading session at 10am.

Investors can place buy and sale orders during the pre-opening session – from 9.45am to 10am. The exchange's trading system algorithm will make a match among the orders, which will be executed as soon as the opening session begins.

The price, at which the maximum number of trades from the pre-opening session will be executed, will be the opening price of the session.

DSE officials said the pre-opening session will help reduce the load on the trading system at the opening moments as the match-making engine will accomplish a lot of tasks before the execution moments.

Chittagong Stock Exchange (CSE), the second bourse of the country, has been running both the pre-opening and post-closing sessions for the last two decades.

Muhammed Mortuza Alam, head of surveillance and market operations, told The Business Standard that, "Pre-opening sessions give investors an updated opening price which offers them a more dynamic reference price."

He said to a large number of investors, especially who follow technical analysis to trigger their buy-sale decisions, care a lot about the closing price. Post-closing session, which CSE calls "Close Price Trading Session", offers the investors an opportunity to follow the market and execute their trading plan.

Some other investors often remain busy during the main session and cannot follow up their orders if executed or not. The short session after closing helps them get the trades executed at closing price, he added.

At the CSE, pre-opening is a 20-minute session while its Close Price Trading Session is a five-minute session.

Post-closing sessions at the DSE will begin at 2.30pm and end at 2.40pm.

Both the bourses calculate the closing price based on the average price of trades executed over the last 30 minutes of the session. If there is no trade of specific scrip over half an hour, the bourses take the average price of some latest trades as closing price.

However, the circuit breaker—the allowable limit for price to move—will be based on closing price at the DSE instead of the new opening price.

Almost all the peer stock exchanges across the world have their additional sub-sessions like pre-opening, post-closing to offer convenience and uphold dynamism in the bourses. Their core trading session also lasts longer than that in Bangladesh bourses—10am to 2.30pm.