BSEC raises investment limit to boost liquidity

The Bangladesh Securities and Exchange Commission (BSEC) has decided to increase the minimum investment amount for IPO applications for general and non-residential investors.

General investors must now have at least Tk 50,000 in investment in the stock market to be eligible to participate in an initial public offering (IPO).

It is Tk 1 lakh for non-resident Bangladeshi investors, which is Tk 20,000 for both residential and non-resident Bangladeshi investors, said the BSEC in a statement after a regular commission meeting on Wednesday. 

The stock market regulator said that these investment limits have been imposed to increase liquidity in the stock market, develop the long-term investment habits of ordinary investors and allow real investors to apply for IPOs. 

On December 31, 2020, the BSEC framed rules on IPO share allotments among the investors on a pro-rata basis instead of the IPO lottery system to ensure that every applicant gets shares in proportion to their subscription value.

A pro-rata basis means an applicant will be allotted shares according to a percentage of the shares applied for.

Someone willing to buy the IPO shares must be an investor in the secondary market. And he must have the listed companies' shares of at least Tk 20,000 in his BO (beneficiary owner's) account, "according to the securities regulator.

Besides, the BO account-holder should make an IPO application involving at least Tk 10,000 or its multiples.

Previously, general investors had to deposit a fixed amount when they applied for IPO shares. Then a lottery is held to determine who will get the shares. Those who fail to get the shares to get their money back.