2024-03-29 04:56:55
Considering the current situation in the capital market, the Bangladesh Securities and Exchange Commission (BSEC) has decided to extend the provision facility against unreimbursed losses due to revaluation in margin loan portfolios of stockbrokers and merchant bank customers (investors). According to the new decision, the period of keeping provision has been extended till December 31, 2025.
According to BSEC sources, an instruction in this regard has been issued on Thursday (March 28).
Simultaneously, the directive has been sent to the Managing Director of Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and the President of Bangladesh Merchant Bankers Association (BMBA).
It is known that considering the current capital market condition, BSEC has taken this decision to stop the forced sale and the pressure of the customer to sell shares.
It is mentioned in the instructions that the deadline has been extended till December 31, 2025 for those stockbrokers and merchant bank clients or investors who could not complete the reserve provision against unrealized losses due to revaluation in their portfolios.
Earlier, in February this year, the Bangladesh Merchant Bankers Association (BMBA) proposed to extend the period till December 31, 2025, to keep provisions against unrealized losses on margin loan accounts of merchant banks in the capital market.
Capital market experts believe that after the stock market crash of 2010, many investors who traded shares with margin loans lost their capital. In this, the reverse investors become debtors to merchant banks. Merchant banks now have two avenues to get back the money they are stuck with as investors. One of them is to sell all the shares from the investor’s account. The other is to gradually reduce the debt by making provisions against losses as investors. However, if the shares are sold, the selling pressure will increase in the capital market and the capital of the merchant banks will become negative. Therefore, in order to solve this problem, BMBA proposed to extend the period to keep provision against unreimbursed losses in margin accounts of customers.
Considering the current market conditions, BSEC has extended the provision facility against unreimbursed losses due to revaluation of margin loan portfolios of stock brokers and merchant bank investors till December 31, 2025, considering the proposal of BMBA.
Earlier, in a BSEC directive issued on March 27, 2023, the period for holding provisions against unrealized losses as margin loans of stockbroker and merchant banks’ own portfolios was extended till December 31, 2025.