BSEC issues new guidelines for margin loans

The Bangladesh Securities and Exchange Commission (BSEC) has issued a new margin lending policy for brokerage houses and merchant banks in line with the Dhaka Stock Exchange's (DSE) main price index DSEX.

The order, signed by BSEC Chairman Prof Shibli Rubaiyat-ul-Islam, was issued on Monday (September 21) in continuation of previous directives.

According to the BSEC's new margin loan guidelines, brokerage houses and merchant banks will be able to lend margin loans to customers at a maximum rate of 1:1 when the DSEX index is below 4,000. In other words, a maximum margin loan of 1 taka can be given against the customer's own investment of 1 taka.

In addition, it will be able to lend margin at the rate of 1:0.75 in case of index up to 4,001-5,000; at the rate of 1:0.50 in case of index up to 5,001-6,000 and at the rate of 1:0.25 in case of index above 6,000.

This order will be effective from October 1.

Note that currently, the maximum margin lending rate is 1:0.50 and this is the same in all cases. In other words, a maximum margin loan of 0.5 taka can be given against the customer's own investment of 1 taka.

sr/zn