BSEC to relax margin loan rules, introduce script netting facility

The Bangladesh Securities and Exchange Commission (BSEC) is set to relax several existing restrictions on margin loans in the capital market. The regulatory body has also given in-principle approval to introduce script netting for the first time.

The decisions were made at a commission meeting on Tuesday, July 14. A draft of the revised margin loan regulations will soon be published for public feedback.

According to the proposed amendments, the current restriction on margin loans for 'B' category shares—which require a minimum investment of Tk 5 lakh over at least one year and offer dividends below five per cent—is being removed.

Additionally, investors will be allowed to use cash in their margin accounts to purchase non-marginable shares. Several other changes have also been proposed to eliminate various complexities in the practical application of the regulations.

Script netting
BSEC has approved script netting for the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE). Under this facility, an investor will be able to buy a particular share, sell it, and re-enter transactions on the same day. However, the commission has imposed conditions requiring strict risk management and adherence to existing laws.

DSE Managing Director Nuzhat Anwar said software development would take at least four months. The facility will initially be launched on around 30 blue-chip shares.

The revised draft also proposes maintaining the price-to-earnings (P/E) ratio of 30 for marginable securities. Additionally, the existing ban on housewives and students obtaining margin loans is proposed to be lifted.