Capital Market Stabilisation Fund

The Bangladesh Securities and Exchange Commission (BSEC) has instructed the Investment Corporation of Bangladesh to invest Tk100 crore from the Capital Market Stabilisation Fund in the stock market.

On Tuesday, BSEC Commissioner Shaikh Shamsuddin Ahmed confirmed the news to the media.

The move was taken to prevent a market crash as the benchmark DSEX index had shed almost 550 points in the last eight consecutive sessions.

In November of last year, the stock market regulator approved an ICB investment of Tk 100 crore from the market stabilisation fund. The BSEC estimated that the initial size of the market stabilization fund would be more than Tk 21,000 crore.

The instruction was given to the ICB as the market suffered a massive sell-off due to rumors and commodity price hikes in the global market, according to the BSEC commissioner.

The securities regulator also instructed stock exchanges to calculate the lower limit circuit breaker at 2 per cent for all issues, but the upper limit circuit will remain the same at 10 per cent, with effect from Wednesday.

Meanwhile, BSEC Chairman Shibli Rubayat-Ul-Islam also advised investors to be patient and not panic over the ongoing free fall of the indexes in the bourses.

The stock market regulator chief, talking to The Business Post on Monday, said, “There was no reason to panic about negative equity issues. The commission has extended the time till 2023 through a notification. There is still more time to adjust it.”

In June last year, the BSEC formed the market stabilisation fund using undistributed and unclaimed dividends of listed companies. The aim is to use the funds to safeguard the interests of the stock market and general investors.

The main purpose of the fund is to ensure the settlement of investors’ claims against transferred funds of unclaimed/ unsettled cash and stock dividends.

The fund provides liquidity to the capital market- by way of direct buying and selling of listed securities; through securities lending and borrowing to the capital market intermediary, and by supporting the market maker for the development of the capital market.