BSEC lowers circuit breaker limit to 2% for 66 firms

Due to a massive collapse in the share prices of 66 companies after the withdrawal of the floor price system, the securities regulator has lowered the circuit breaker limit to 2% from 10% on these shares to curb further losses of investors.

The Bangladesh Securities and Exchange Commission (BSEC) made the decision at an emergency meeting on 10 April. The new directive will be effective from 11 April.

Rezaul Karim, executive director and a spokesperson of the BSEC, said the commission had made the decision to protect investor interests amid the coronavirus pandemic.

As per the new directive, share prices of the 66 companies must not fall below 2% while the upper limit of the circuit breaker will remain unchanged at 10%.

Earlier, on 7 April, the stock market regulator withdrew the floor price system for the 66 companies. The move, which came into effect the following day, was made to protect the interests of investors as they could not buy or sell these shares.

Sources at BSEC said the share prices of 110 companies remained stuck at the floor price or the lowest price level for a long time till 7 April. The 66 companies, with their share prices being below Tk50 each, got rid of the floor price.

The 66 companies include People's Leasing, RN Spinning, Bangladesh Service, IFIL Islamic Mutual Fund, Zaheen Spinning, Ring Shine Textile, Olympic Accessories, DBH First Mutual Fund, Phoenix Finance First Mutual Fund, Nurani Dyeing and Sweater, Regent Textile, SEML FBLSL Growth Fund, Evince Textile, Pacific Denims, Metro Spinning, Kattali Textile, Far Chemical, Deshbandhu Polymer, Yeakin Polymer, Safko Spinning, Western Marine Shipyard, Central Pharma, Beach Hatchery, Simtex Industries, Shepherd Industries, Hamid Fabrics, Prime Textile, Saiham Cotton, Bangladesh Building System, Golden Harvest Agro Industries, AGC Agro Biotech, Bengal Windsor Thermoplastic, Khulna Printing and Packaging, Silva Pharma, Indo-Bangla Pharmaceuticals, Argon Denims, Coppertech Industries, Shasha Denims, Shurwid Industries, Esquire Knit Composite, VFS Thread Dyeing, IPDC Finance, Phoenix Finance, Advent Pharma, RSRM, Queen South Textile, Mutual Trust Bank, Oimex Electrode, Rupali Bank, Saiham Textile, Sonargaon Textile, Alif Industries, Global Heavy Chemical, Navana CNG, Desco, Unique Hotel, Standard Insurance, Fareast Islami Life Insurance, Uttara Finance, Usmania Glass, Khulna Power, Nahee Aluminum, Dulamia Cotton, Sinobangla Industries, Paramount Textile, and ML Dyeing.

On 8 April, share prices of these companies saw a massive decline while Dhaka Stock Exchange's (DSE) main index, DSEX, fell by 1.54% or 82.55 points.

General investors claimed the market had seen a big fall due to the withdrawal of the floor price, according to the organisation of small investors, Bangladesh Pujibazar Biniogkari Oikya Parishad.

They said at a demonstration on Thursday that the regulator should maintain the floor price system to protect small investors.

Earlier, on 19 March last year, the stock market regulator imposed the floor price to curb the abnormal fall in prices due to the pandemic.

As per the BSEC directive, the opening price of the listed securities has been set at the average of the closing price of the immediately preceding five trading days of 19 March last year. This average price calculated for each security was considered the floor price and the lowest limit of the circuit breaker.