BSEC further relaxes margin loan facility

The Bangladesh Securities and Exchange Commission (BSEC) has further relaxed the margin loan norms aiming at increasing greater fund flow to the cash-starved stock market.

From now on, lenders can provide margin loans to their clients against any listed companies except the junk ones soon after the companies’ changing categorisation, said the regulator in a statement on Sunday.

However, in case of ‘Z’ category companies, they can provide margin loans after seven trading days from the date of categorisation.

In 2015, the BSEC barred merchant bankers and brokers from giving margin loans against any category-changing companies or securities in the first 30 trading days.

The margin rules will remain the same for the new companies listed with the stock exchanges, which means no margin loans can be provided against the companies and securities in the first 30 trading days from the date of their listings.

On November 15 this year, the BSEC scrapped index-based margin loan facilities and allowed stockbrokers and merchant banks to provide a maximum of 80 per cent of investors’ deposits as margin loans.

The BSEC had set the margin loan ratio at 1:0.8 for shares of a company having a price-earning ratio below 40. It means that investors will get a maximum of Tk 80 as margin loans against their Tk 100 deposits for any marginable company.

According to the Dhaka Stock Exchange (DSE) settlement and transactions regulation, a listed company needs to declare at least 10 per cent dividend for its shareholders to be traded under the ‘A’ category. If the company declares less than 10 per cent dividend, it will be placed in the ‘B’ category. A company will be downgraded to the ‘Z’ category if it does not declare any dividend or does not hold annual general meetings regularly or is not in continuous operation for more than six months.

Meanwhile, the commission decided to reduce the minimum application limit for eligible investors to Tk 20 lakh from Tk 50 lakh for JMI Hospital Requisite Manufacturing Limited bidding.

On January 9, JMI Hospital Requisite will open the bidding for its share price discovery under the book-building method.

The eligible investors (EIs) will explore the cut-off price of the shares until 5 p.m. on January 12.

The medical instrument and hospital equipment manufacturer received the regulator’s consent on November 25 to raise Tk 75 crore from the capital market through IPO shares.