The regulatory body Bangladesh Securities and Exchange Commission (BSEC) has introduced new rules to prevent the continuous fall in the prices of shares and units in the capital market. As a result, the prices of shares and mutual funds of listed companies cannot fall by more than 3 percent in a day. Currently, company shares and mutual funds may fall by up to 10 percent depending on the price.
An order signed by BSEC Chairman Professor Shibli Rubaiyat-ul-Islam was issued on Wednesday (April 24). The new rules for circuit breakers will come into effect from tomorrow Thursday (April 25).
According to the directive, the rules for circuit breaker in case of rise in share price on June 17, 2021 will remain unchanged. However, the maximum limit in case of price reduction will be 3 percent. This rule will be applicable to all securities except securities at floor price. This decision has been taken to protect the interests of the country’s capital market and investors.
Earlier in 2021, the capital market regulator BSEC had imposed a minimum price level or floor price in the stock market to prevent a continuous fall in the stock market. There was no scope for the share price of listed companies to fall below a certain limit. Imposition of floor price leads to a kind of stagnation in the market. Most of the shares stopped trading. Later, the sector concerned demanded to lift the floor price. Later, after discussion with the stakeholders, the floor price was lifted step by step from January this year.
The BSEC directive has mentioned that the new rules have been taken in the interest of investors and capital market to prevent collapse. However, stock market analysts say that this decision will not benefit the stock market. Rather, the normal demand and supply system in the market will be disrupted.
They say that before this the market was held back for a long time with the floor price. After much criticism, BSEC lifted the floor price. Now again such a decision has been taken. This will not benefit the market.
Stock market prices fell on Wednesday
The main stock market Dhaka Stock Exchange (DSE) main index DSEX fell by 55 points or about 1 percent on the day and fell below 5 thousand 600 points. On that day, the main index of DSE was at 5,579 points, which is the lowest in the last 35 months. Earlier, the DSEX index was at its lowest level of 5,535 points on May 4, 2021.
To prevent this fall in the market, the maximum limit for the fall in the share price has been fixed. According to the new guidelines, no share price can fall more than 3 percent from tomorrow, Thursday.
Of the 394 companies traded on the DSE, 274 or 70 percent fell. 79 or 20 percent shares rose in price. And the price was unchanged at 41 or 10 percent.
While the share prices of most of the indices and traded companies fell, the total turnover showed a slight improvement. The volume of transactions on DSE on this day was Tk 603 crore, which is Tk 5 crore more than the previous day.
SI/SKD
