The margin account holders who were barred from share trading due to a huge fall in share prices will now be able to trade as the Bangladesh Securities and Exchange Commission on Tuesday suspended the bar until September 30.
The BSEC made the decision in a bid to break the stagnancy at the capital market following the Dhaka Stock Exchange’s proposal.
The decision was taken in a regular commission meeting presided over by BSEC chairman M Khairul Hossain, a BSEC news release said.
The BSEC release also said that the commission suspended the sub-section 5 of section 3 of Margin Rules-1999 until September this year following the application of the DSE and considering the present condition of the capital market.
According to the sub-section 5 of section 3 of Margin Rules-1999, whenever the equity in a client’s margin account falls below 150 per cent of the debit balance, the member shall request the client to provide additional margin to bring the equity to not less than 150 per cent.
It also says that such additional margin must be satisfied by deposit of cash or marginable securities within three days from date of notice. The member shall not permit any new transactions in the margin account unless the resulting equity in the account would be not less than 150 per cent of the debit balance.
A recent DSE data showed that total outstanding margin loan provided by the stockbrokers, merchant bankers and financial institutions stood around Tk 15,000 crore and the amount was increasing.
The DSE, in its proposal sent to the BSEC, observed that as the share prices of the listed securities declined significantly, only around 25 per cent of the margin loan was recoverable.
The DSE also observed that in this circumstance, most margin loan recipients have negative balance in their margin accounts.
‘Currently, they remain inactive as they can not trade shares due to the bar under a clause of the margin rule,’ the DSE proposal said.
The bourse also requested the BSEC to relax the rules until the stockbrokers and merchant bankers can recover the amount by at least 135 per cent through restructuring.
-With New Age input
