I refer to Mr. Van Beek's response (16.12.04) to the letter captioned "Why was the bid price for Banks shares reduced to $3.80?"
I am shocked that Mr. Van Beek confesses that this is a broker's action and claims that this broker's actions had no impact on the share price when it was reduced to $3.80, as no seller was prepared to deal at that price. The question to Mr. Van Beek is - can he give the same answer for other transactions which this broker whom he refers to had week after week lowered the price of Banks shares. Did it have an impact?
Further from what I understand according to Banks' Press Release, the answers in GASCI's press release were not the answers given as reasons to Banks DIH for suspension in the trading of shares. The further question is why is he defending the issue?
Yours faithfully,
Alfred Joseph
Editor's note:
We sent a copy of this letter to Mr Patrick van Beek, the managing proprietor of Caribbean Actuarial and Financial Services for his comments and received the following response:
" Mr Joseph is clearly misinformed about the workings of the market. I would like to invite him to come to the exchange so that he can see for himself how prices are determined and to clarify his misconceptions.
He alludes that a particular broker's actions "lowered the price of Banks shares". This is incorrect: brokers do not set the price, only the price at which they are prepared to deal. It takes two to tango, so unless someone is prepared to deal at that price, no deal will be done. An examination of the order book for the stock exchange since trading began on the exchange shows that until recently there has been many more times the quantity of stock for sale than there have been buyers. As with any stock market in the world, an imbalance between the volume bid and offered indicates that there is excess demand (if bids exceed offers) or supply (if offers exceed bids) which may put upward or downwards pressure on prices respectively since with excess demand buyers will have to outbid each offer for the scarce amount of stock on offer while with excess supply sellers will have to undercut each other to get the shares away to a limited number of buyers.
A summary of the order book at the end of every session is available for analysis on our website, www.gasci.com and the pattern of excess supply in the first seventy sessions is readily apparent.
As I stated in my previous reply, in the vast majority of cases it is the clients, those people who place the order to buy or sell shares with the brokers, not the brokers that set the limit price. If the owners of shares are queuing up to sell them, in the absence of a similar number of buyers, the price will fall."