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The High Court (HC) has asked the Bangladesh Securities and Exchange Commission (BSEC) to explain why three sections of the revised margin rules should not be declared 'unconstitutional'.
An HC bench comprising Justice Fahmida Quader and Justice Ashif Hasan on Wednesday issued the rule following a writ petition filed by a group of general investors led by SM Iqbal Hossain.
The revised rules, titled Bangladesh Securities and Exchange Commission (Margin) Rules, 2025, came into effect after the issuance of a gazette notification on November 6.
Barrister AK Azad, a lawyer representing the BSEC, said the court would send a copy of the ruling to the securities regulator through a special messenger. A court hearing on the ruling would then be scheduled.
The petitioners had sought a stay order on three sections of the margin rules.
"The court cannot directly issue a stay order on any law. That's why the HC asked the BSEC to explain its position regarding the said sections of the margin rules," said Mr. Azad.
According to the BSEC lawyer, the petitioners challenged Sections 6, 7, and 9 of the margin rules.
Section 6 of the margin rules imposes a restriction on opening and maintaining margin accounts without an agreement-signed and stamped-between the lender and borrower.
Section 7 is aimed at bringing discipline to margin financing. For example, any amount received as a margin loan cannot be used for any purpose other than investing in marginable securities.
Section 9, which has also been challenged, requires lenders to begin portfolio adjustment through forced selling following a 50 per cent erosion of a client's equity.
The previous rules required forced selling after 75 per cent of an investor's equity was gone.
BSEC officials said there had been little scope for borrowers to recover anything from selling holdings after repaying margin loans with interest under the earlier rules. The revised margin rules are intended to streamline margin financing for the sake of clients and the market as a whole, according to the regulator.
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