BSEC lifts floor price from 169 cos, mutual funds

Signaling an end to the regulatory intervention in the share price mechanism, the Bangladesh Securities and Exchange Commission (BSEC), the securities regulator, lifted the floor price from 169 listed companies and mutual funds.

The stock regulator on Wednesday issued an order in this regard and asked the stock exchanges to implement the order from today (Thursday).

The floor price system which still is in place for many would not be applicable for the selected 169 securities, as per the BSEC order.

From now on, the lower price change limit for the mentioned 169 companies would be 1 per cent based on the reference price of the last trading day’s closing price.

An upper price change limit (circuit breaker), however, would still be applicable for them, according to the BSEC order.

The BSEC on July 28 this year, imposed floor prices on all companies again to prevent shares from falling beyond a certain level.

Share prices of most of the companies have been stuck at their floor prices, making investors averse to liquidating their holdings, consequently creating a liquidity crunch in the market.

Previously in March 2020, the securities regulator had adopted a similar step targeting to limit the free fall of shares after the severe outbreak of the Covid-19 global pandemic in Bangladesh, when the DSEX fell below the 3,000 level.

When a floor price is fixed, no company’s shares can be traded below the fixed price. If a company’s shares are traded at the floor price that would be regarded as the lowest price of that company’s shares.

The BSEC in yesterday’s order said the upper limit of the circuit breaker and other existing terms would be in place until the issuance of any further notice.

Earlier, BSEC Chairman Professor Shibli Rubaiyat-ul-Islam said to protect small investors’ interests, they had no alternative but to introduce the floor price mechanism.