The Bangladesh Securities and Exchange Commission (BSEC) on Tuesday withdrew the floor price for another six companies’ shares.
The stock market regulator’s order will come into effect on Wednesday for Orion Pharmaceuticals, Anwar Galvanizing and Renata Ltd, and will remain in effect until further notice.
Meanwhile, the remaining three companies — British American Tobacco Bangladesh, Grameenphone and Robi — will have the floor price until their forthcoming record date.
Now only six companies share the floor price. These are Beximco Ltd, BSRM Ltd, Islami Bank, Khulna Power, Meghna Petroleum, and Shahjibazar Power.
As per the new order, the upper limit and lower limit of the circuit breaker will apply to all securities other than the six companies’ shares as per the previous order, which was issued on November 14, 2019.
The BSEC withdrew the floor price on listed securities 18 months after imposing them, to bring back a vibrant capital market. The regular circuit-breaker mechanism – which was in effect before the imposition of floor price – is now effective.
That means their prices may increase or decrease by up to 10 per cent a day.
For newly listed scrips, the circuit breaker for the first trading session will be 50 per cent of the issue price, and on the second trading day, the price can go 50 per cent higher or lower than the closing price of the first session.
In the third session, the scrips will follow the regular circuit breaker.
On January 18, after the session's closing bell, BSEC issued an order rescinding the floor price for all listed companies and mutual funds, except for 35 companies' shares, complying with a long-standing demand from stakeholders.
On January 21, DSEX fell 96.50 points, or 1.52 per cent, in the first trading session after the floor price withdrawal. After five minutes of trading, the key index had plunged about 214 points but later recovered most of the initial losses.
The next day, DSEX gained 14.05 points and closed at 6,254.31. The stock market regulator also withdrew the floor price for 23 more companies that day.
Market insiders said the key index was very much expected to fall as a large number of stocks failed to see price discovery for a long time due to the floor price.
They also said that many investors did not get the opportunity to trade due to the prolonged price level. As a result, there was pressure to sell shares at the beginning of the day, but it gradually decreased.
Welcoming the floor withdrawal move, a leading stock broker said the market might see some corrections in the first few days. It’s nothing to be afraid of, and the market will recover very soon.
On July 28, 2022, BSEC imposed floor prices on all securities to prevent shares from falling beyond a certain level amid domestic and global macroeconomic strains.
The share prices of most companies have been stuck at their floor prices for an extended period, pushing investors towards liquidating their holdings and creating a liquidity crisis in the market.
After the removal of the floor price on most of the listed companies, Dhaka bourse’s turnover had crossed Tk 1,600 crore for the first time.
The key index of the Dhaka Stock Exchange closed at 6,346.06 points on Tuesday.
