JSE investigates Oakbay trades

Cape Town - When routinely monitoring trades during the morning of Friday 31 March 2017, the JSE’s market regulation team identified trades in Oakbay Resources and Energy shares that appeared to be evidence of market abuse.

These trades were, therefore, cancelled by the JSE.

According to Peter Redman, senior technical adviser in Market Regulation at the JSE, a report has been prepared and will be handed to the Directorate of Market Abuse at the Financial Services Board.

"There is nothing to suggest that the company is in any way connected to the trades in question,” said Redman.

Nilan Morar, head of trading at Purple Group, told Fin24 on Monday that he does not think it had anything to do with matters regarding Oakbay itself.

"The JSE has a requirement to manage a fair market and part of that involves monitoring against market manupulation. The share in question is not a liquid share. Last year the average daily volume has been 273 shares, so it is quite illiquid," explained Morar.

"That said, typically with illiquid shares, comes a very wide bid offer spread and there are certain mechanisms in place to prevent accidentally crossing an extremely wide spread. The concern around this type of price action is that you mark up a shareholding."

READ: 72 transactions 'don't warrant investigation' - Oakbay CEO

Morar pointed out that on Thursday March 30 only five Oakbay shares were traded and the share price closed at R7.11. The physical trade prior to that was on March 23 March for 777 shares at R10.37 - a big move in percentage terms and on very light volume. The physical trade prior to that was on Monday March 20 when 200 shares were traded at R15.50.

On Friday March 30 the share price closed at R9.15 after 30 shares were traded.

Business Report reported on Monday that one analyst said the upswing in the Oakbay share price could have been due to "renewed optimism about the nuclear programme" following former finance minister Pravin Gordhan and his deputy Mcebisi Jonas's dismissal. Oakbay has a 74% interest in Shiva Uranium.

Morar, however, told Fin24 that nuclear is unlikely the cause of the move in the share price as only 30 shares were traded on Friday.