Prime News Report
Dhaka: The Securities and Exchange Commission (SEC) withdrew the restriction on margin loan, allowing investors getting more money to invest in shares.
The decision was taken at a board meeting of the SEC, held Wednesday afternoon at the commission's office in the city with its chairman Prof M Khairul Hossain in the chair.
With lifting of the restriction, SEC now allows merchant banks and share brokers to prove investors margin loan to purchase any newly listed security in between 1st to 30th trading day after listing of it. Similar credit facility will be provided for buying existing listed security in between 1st to 30th trading day after changing of its category.
Earlier, investors were allowed to get margin loan only after 30 days of either listing or changing category of a security.
A margin loan is a loan taken out to invest in shares or managed funds where the shares are provided to the lender as collateral. Currently, a share investor can get margin at the ratio of 1:0.5, meaning the investor will get a loan of taka 50 against his investment of taka 100 in securities.
The decision to lift restriction on margin loan drove index at Dhaka Stock Exchange (DSE) recover Wednesday's slide with a huge margin. The general DSE price index, which went below 4000-mark at Wednesday's close, gained over 121 points to finish the week higher at 4210.58.
The news about the agreement between the government and the Asian Development Bank (ADB) on a capital market development programme also prompted investors act positively in the market.
The government signed an agreement with ADB on Thursday under which the development partner will provide US$ 300 million for stabilizing financial markets as well as making it safer and more attractive places for invest.
The assistance for the Second Capital Market Development Program will pursue, among other issues, demutualization of the stock exchanges, strengthening the Securities and Exchange Commission, and boost the insurance sector.
Ends/AMA/29/11/12
