The Bangladesh Securities and Exchange Commission (BSEC) on Monday withdrew the floor price for another 23 companies’ shares. This BSEC order will come into effect on Tuesday, and will remain in effect until further notice.
On Thursday, after the session's closing bell, the stock market regulator 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.
Now only 12 companies share the floor price. These are – Anwar Galvanizing, British American Tobacco, Beximco Ltd, BSRM Ltd, Grameenphone, Islami Bank, Khulna Power, Meghna Petroleum, Orion Pharma, Renata, Robi Axiata, and Shahjibazar Power.
As per the new order, the upper limit and lower limit of the circuit breaker will be applicable to all securities other than the 12 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, in order 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 from the closing price of the first session.
In the third session, the scrips will follow the regular circuit breaker.
On Sunday, DSEX fell 96.50 points, or 1.52 per cent on the first trading session after withdrawal of the floor price. After five minutes of trading, the DSEX index plunged about 214 points but later recovered most of the initial losses.
The key index finally went down by 96.50 points to settle at 6,240. Meanwhile, market turnover also decreased by 7.6 per cent to Tk 588 crore as against Tk 637 crore in the previous session.
Market insiders said it 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 is pressure to sell shares at the beginning of the day, but it is gradually decreasing.
Welcoming the floor withdrawal move, a leading stock broker said the market might see some correction in the first few days. It’s nothing to be feared, and the market will recover very soon, they said.
After the session's closing bell on Thursday, the stock market regulator, the Bangladesh Securities and Exchange Commission (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.
As per the new order, the upper limit and lower limit of the circuit breaker will be applicable for all securities other than 35 companies’ shares as per the previous order, which was issued on November 14, 2019.
On July 28, 2022, the 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 thus creating a liquidity crisis in the market.
Back in March 2020, the securities regulator took a similar move to limit the free-fall of shares following the global pandemic, when the DSEX fell below 3,000 points.
