The Financial Express

Margin loan ceiling raised to curb free-fall of share prices

| Updated: April 09, 2021 17:19:12

Margin loan ceiling raised to curb free-fall of share prices

The stock market regulator on Sunday increased the marginal loan limit for the investors to curb the free-fall of share prices.

From now on, investors will be able to borrow more than before.

The investors will get margin loan ratio of 1:0.80, if the key index of the Dhaka Stock Exchange (DSE) stays below 7,000 points, as per the latest decision of the Bangladesh Securities and Exchange Commission (BSEC).

That means, the investors will get a maximum loan of Tk 80, if he/she purchases shares of Tk 100. Earlier, the investors got margin loan of Tk 50 against buying of shares worth Tk 100.

The BSEC took the decision amid investors' panic onrising coronavirus cases in the country, said BSEC executive director and spokesperson Mohammad Rezaul Karim.

The new margin loan limit will be effective from today (Monday), he said.

However, if the main index of DSE exceeds 7,000-mark, the loan limit will come down to 1:0.50 per cent.

The BSEC took the decision after the key index of the Dhaka Stock Exchange (DSE) saw a biggest single-day fall in more than 12 months on Sunday as jittery investors dumped their holdings amid growing tension over impact of the virus-induced lockdown in the country.

DSEX wiped out by 181 points or 3.44 per cent to settle at 5,088, the largest single-day fall since March 16 last year just ahead of the first lockdown enforced on March 26, 2020 due to Covid-19 scare in the country.

The DSE also suspended pre-opening and post-closing session from Sunday until further notice. The bourses also cut the trading hours to two hours from existing four and a half hours during lockdown.

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