SECP finds no trace of insider trading

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) on Monday ruled out any kind of alleged manipulation to slash share value of state-owned Oil and Gas Development Company (OGDCL) to underestimate the entity’s value before a planned divestment.

The SECP said it concluded its probe into allegations about manipulation in the shares of OGDCL on January 22, 2020, “with respect to purported rumors about its privatisation at a discount to market price”.

“The analysis did not reveal any irregular patterns, abusive market practices or insider trading,” it said in a statement. “Moreover, the trading activity of 22nd January, 2020 was reviewed to rule out any possibility of abusive market practices carried out with an objective to realising any undue future gains.”

The SECP, referring to the analysis, said individuals and mutual funds contributed to 38 percent and 24 percent of the total selling volume, respectively. Individuals contributed to 49 percent and brokers to 24 percent of the buying volume. Total amount of profit taking by the top 10 traders aggregated to Rs1.7 million. Among these top 10 traders, maximum profit of Rs307,381 was made by an institution.

Last month, OGDCL’s share value slumped five percent during an intraday trade with panic selloff occurring after reports that the government was considering a divestment of seven percent stake in the entity at a discount value. However, an abnormally-large lot of its shares were bought in the last hour. The company turned up around 20 million shares in a single day trade.

A broker then said the government was pricing OGDCL at Rs129/share for 7 percent stake sale and that created panic in the market.

Though the Privatization Commission disclosed the divestment plan, the price was not mentioned in its notice to the Pakistan Stock Exchange.

“Up to 7 percent OGDCL shares will be offered at a value that is best reflective of the fundamentals of OGDC including its strong financials,” it said. “There is absolutely no consideration to offer OGDC shares either at a discount of an historical average. Any rumors pertaining to transaction size or discounted divestment price are strongly refuted.”