New rules for margin loans in stock market, gazette of revised regulations published

The Bangladesh Securities and Exchange Commission (BSEC) has introduced major changes to the margin loan system in the stock market. The commission has published the gazette of the amended 'Bangladesh Securities and Exchange Commission (Margin) Rules, 2025', incorporating new provisions on loan facilities for investors, marginable shares, risks for lending institutions and share sales. The amended rules have come into effect from the date of gazette publication.

BSEC Executive Director and Spokesperson Md Abul Kalam confirmed the matter in a press release on Tuesday, August 18. It said the amended rules were published in the Bangladesh Gazette's additional issue on Monday night. Under the new rules, the margin loan ratio for listed shares has been set at 1:1, meaning an investor can take a maximum margin loan equal to the amount of equity in their own account.

According to the new provisions, margin financing will not be allowed for shares of companies (other than life insurance companies) if their trailing P/E ratio exceeds 40. Similarly, shares of a company with negative EPS will also be ineligible for margin facilities. For life insurance companies, the P/B ratio will be considered instead of P/E. Margin loans will not be allowed for companies with a P/B ratio exceeding 3 or with a negative net asset value (NAV) per share.

The revised regulations have also set a minimum investment threshold for investors to be eligible for margin facilities. An investor must have an investment of at least Tk 3 lakh in stock exchange-listed securities in their account to be eligible for margin financing. Additionally, if a security not covered under the margin facility is purchased using margin loans instead of own funds, the value of that security will not be considered as the client's equity.

The new rules also bring changes to margin calls and share sales. If an investor's portfolio equity falls below 50 percent, the lending institution must issue a margin call or prior warning. If equity falls below 25 percent, the institution may sell the concerned shares without prior notice. However, the client must be informed in writing, via email, by text to their registered mobile number, or by phone if necessary.