Home ›› 01 Aug 2022 ›› Front
Bangladesh Securities and Exchange Commission (BSEC) has been forced to reintroduce the floor price for stocks just to protect the retailers as the country’s stock markets are teeming with the retailers.
“We don’t want to reset the floor price. But we’re are forced to do that just to protect retailer investors,” said its Chairman Prof Shibli Rubayat-Ul-Islam at an event organised by the Capital Market Journalists Forum’s (CMJF) in Dhaka on Sunday.
“Because the number of small investors in the stock market is high. We need more educated and institutional investors that were seen in the markets of the developed countries,” he said.
“The BSEC does not want to intervene in index movement in any way. But it does when it witnesses the retailer investors are continuously losing money,” Shibli added.
On Thursday, Bangladesh Securities and Exchange Commission had reintroduced floor price to prevent a continuous downward spiral of stock prices, which went into effect on Sunday.
As the indices went into freefall, the regulator intervened by issuing the new temporary norms to curb the market volatility.
The regulator reintroduced the floor price under which the average closing prices of any listed security over the preceding five days would be set as its floor price. If prices drop below the five-day average, it would automatically trigger a circuit breaker for an individual stock.
The average price, calculated for each security, will be considered as the floor price and the lowest limit of the circuit breaker. “The latest action was taken in light of the recent global economic situation and to protect investor interests,” the BSEC stated.
Previously, the securities regulator took a similar step in an attempt to limit the free fall of share prices during the COVID-19 outbreak on March 19, 2020, when the DSEX fell below the 3,000-level.
Besides, banks are allowed to invest 25 per cent of their capital in the capital market, which is called the exposure limit. The calculation of the exposure limit is based on the cost price instead of the market price.
The BSEC chairman said the Bangladesh Bank will announce a positive decision regarding the exposure limit and bonds very soon. The matter is under process. “No one would be able to bring governance to the stock market unless the whole environment is cooperative,” he said.
The Capital Market Stabilisation Fund (CMSF) received unclaimed cash and stock dividends from several listed companies and mutual funds, but some companies did not transfer the fund yet.
“Those who have not transferred the fund yet will have to pay in advance with penalty. It will be much like calculating interest on a daily basis,” the BSEC chairman warned.
He said, “We are trying to bring the good companies to the capital market. But everyone wants to submit good accounts. For this reason, many are waiting for it to come.”
“Maybe, a few good companies will submit their reports as of June closing. But if the fake accounts are detected, we’ll cancel IPOs of those companies,” he said.
