BSEC launches IT audit of stock exchanges

The decision follows multiple technical problems that occurred on the country's stock exchanges during trading of securities.

The Bangladesh Securities and Exchange Commission (BSEC) has launched an audit of the IT operations of the Dhaka and Chittagong stock exchanges to assess their strengths, weaknesses and potential threats. The audit aims to ensure efficient services in the operation and trading of securities.

The stock market regulator formed a six-member inspection committee for this purpose in May this year, in accordance with an internal order.

The committee began its work and requested information from exchanges in June regarding the SWOT (strengths, weaknesses, opportunities and threats) analysis of their IT system and mitigation strategies.

The committee also asked the exchange to provide a comprehensive analysis of its IT systems, focusing specifically on aspects such as data security, privacy, backup and recovery procedures and log management.

Besides other responsibilities, the main role of stock exchanges is to facilitate the buying and selling of securities, relying heavily on information technology.

In recent years, the Dhaka Stock Exchange (DSE), the country's main stock exchange, has experienced several technical glitches during securities trading. Following these incidents, the exchange and the regulator formed fact-finding committees to probe the issues, but the findings have not been made public.

In March, an operational glitch occurred at the Dhaka Stock Exchange, leaving investors in the dark throughout the trading session as its website displayed incorrect information about indices.

Earlier in 2022, stock trading on the DSE was halted for three hours due to technical issues.

A BSEC official, requesting anonymity, told TBS that the securities regulator had taken the initiative to resolve these issues permanently.

If any deficiencies or problems are identified, the commission will take appropriate measures to ensure the proper functioning and operation of the computer systems, he added.

Tasks of the committee

The Inspection Committee will conduct a full IT audit and partial audit of critical information processing of stock exchanges operating in Bangladesh every year as per the order of the BSEC office.

In the event of a significant event or incident being detected, which may affect trading, the functioning of the market or its indices, during any audit, the Committee will submit an interim report to the Commission concerning the particular incident.

Sheikh Mahbub Ur Rahman, Director General of BSEC, is the coordinator of the committee, while Md Yasin Rahman, Deputy Director of BSEC, is the secretary of the committee.

According to the stock market regulator, the committee will conduct an IT audit of affairs related to IT infrastructure, data server and stock exchange management software and submit a report to the commission within 30 working days after the end of each financial year.

Meanwhile, regarding the quarterly IT audit on the handling of critical information by the exchange officials, the committee will verify trading data, stock information, etc., and report to the commission within 10 working days after the end of each quarter of the financial year, the order said.

The order states that the scope of annual computing will be determined by the committee from time to time with information to the concerned department of the committee.

Issues to be inspected include compliance, category, physical security, network security, data backup and recovery, hardware and software inventory, change management, environmental controls, access control, physical infrastructure, incident response, monitoring logging, vendor management and other related issues.