Home ›› 01 Mar 2022 ›› Stock
The Bangladesh Securities and Exchange Commission (BSEC) has extended the negative equity adjustment period by a year to December 31, 2023.
The previous deadline for the negative equity adjustment was December 31, 2022, said the regulator in a statement on Monday.
The statement also clarified on the much-discussed negative equity maintained by some brokerage houses and merchant banks in their clients’ portfolios.
“Different figures and numbers about the negative equity published by several media have confused the market intermediaries and investors, which is an impediment to the development of the market,” said the statement.
Negative equity was piled up during the 2010 market crash when the value of share prices fell below the prices bought by the investors with margin loans from the brokerage firms and merchant banks.
The negative equity stood at Tk 8, 673 crore as of September 2021, down from Tk 12,250 crore in 2020 and Tk 9,091 crore in 2017, according to the BSEC data.
As the BSEC has been making its relentless efforts to make the stock market free from negative equity since 2015, most of the intermediaries have been able to adjust the negative equity, according to the statement.
“But a small number of intermediaries failed to come out of the woods. That is why the commission instructed them to bring the negative equity to nil by December 31, 2022,” it said.
Since 2015, the BSEC extended the deadline for the market intermediaries for the seventh time to adjust the negative equity.
Negative equity in the investors’ accounts with the twenty-nine merchant banks stood at Tk 3,645 crore, making up 42 per cent of the total equity, and Tk 4,930 crore was in the clients’ accounts with brokerage firms or TREC holders.
And the Chittagong Stock Exchange’s TREC holders’ clients have negative equity worth Tk 98 crore.
The BSEC had said shortly after the 2010 market crash that a portfolio cannot be used for transactions if equity becomes negative after taking margin loans.
