Photo : Messenger
The Bangladesh Securities and Exchange Commission (BSEC) has lifted the floor price for all listed companies and mutual funds, except for the shares of 35 specific companies, after one and a half years.
Nevertheless, experts argue that the floor price should no longer be enforced in the capital market.
The BSEC lifted the floor price (minimum price) from the capital market through a circular signed by the regulatory body's Chairman, Professor Shibli Rubayat Ul Islam, on January 18. The floor price of shares, bonds, and mutual funds for all institutions, except 35 companies, has been lifted and will be effective from January 21.
Nevertheless, the floor price will continue for the following companies: Anwar Galvanizing Ltd, Baraka Power Limited, British American Tobacco Bangladesh Company Limited, Bangladesh Export Import Company Ltd, Bangladesh Submarine Cable Company Limited, Bangladesh Steel Re Rolling Mills Limited, BSRM Steels Limited, DBH Finance PLC, Doreen Power Generations and Systems Limited, Grameen phone Ltd, H RTextile Ltd, IDLC Finance Ltd, Index Agro Industries Limited, Islami Bank Bangladesh PLC.,KDS Accessories Limited, Khulna Power Company Limited, Kattali Textile Limited, Malek Spinning Mills Ltd, Meghna Petroleum Limited, National Housing Finance, National Polymer Industries, Orion Pharma Ltd, Padma Oil Co,Renata Ltd, Robi Axiata Limited, Saiham Cotton Mills, Shasha Denims, Sonali Paper & Board Mills, Sonar Bangla Insurance, Shinepukur Ceramics, Shahjibazar Power Co And Summit Power United Power Generation & Distribution Company Ltd.
According to the circular, 379 stocks, mutual funds, corporate bonds, and debentures listed with the Dhaka Stock Exchange (DSE) that are now free from the restriction will be under the regular circuit-breaker mechanism from Sunday. This means their prices may rise or fall by up to 10 percent in a day.
BSEC's Executive Director and Spokesperson, Mohammad Rezaul Karim, confirmed the matter to The Daily Messenger, saying, “For the well-being of the capital market and investors, the commission has lifted the floor price of all companies except the 35 mentioned.”
Normal circuit breakers will be in effect in establishments where the floor price has been waived. In the case of institutions under the floor price, decisions will be made based on the situation, he added.
He said that the commission expects the withdrawal of the floor price to have a positive impact on the market and bring momentum to it.
Director of Dhaka Stock Exchange (DSE), Richard D' Rozario told The Daily Messenger, “The floor price should have been lifted earlier.” He added that it might reduce the price of some shares, but there is nothing to be upset about. Before lifting the floor price, several institutions, including ICB, needed to hold funds to prevent the market from falling by investing in good stocks even after the share prices fell.
He also mentioned that, in addition to restoring normalcy in the market, the floor price will not be imposed in the market anymore, and investors are expected to return.
Abu Ahmed, a capital market analyst and economist, told The Daily Messenger, “The lifting of the floor price is good news for the new year. BSEC should not make such decisions again in the interest of the capital market and investors.”
Pointing out that the backbone of the capital market has been broken with the floor price, he said the market has suffered and incurred huge losses due to the floor price.
At the end of July 2022, the BSEC set the floor price of every stock to halt the free fall of the market indices amid global economic uncertainties.
The floor price was imposed on July 28, 2022. The floor price is set based on the average transaction of five days. However, in December 2022, the stock market watchdog lifted the floor price for 169 companies to bring vibrancy to the market. In March 2023, the regulator imposed the floor price for 169 companies again. Since then, all stocks have come under the floor price curbs.
Earlier in the first week of January, the BSEC assured stock market intermediaries that the regulator would gradually withdraw the floor price restriction after the national election scheduled for Sunday.
The floor price is the lowest price at which a stock can be traded.
The floor price was introduced to the market in 2020 to prevent the price fall of shares.
Messenger/Fardin
