The Bangladesh Securities and Exchange Commission (BSEC) has framed draft amendments to the BSEC (Margin) Rules, proposing fundamental relaxations to make margin loans more accessible for investors and to expand lending capacity for market intermediaries.
The proposed changes aim to eliminate practical operational complexities, foster an investor-friendly framework, and boost liquidity across the country's capital market.
Key Proposals in the Draft Rules
Extension to Low-Dividend Companies: Under the draft rules, investors will be eligible for margin loans to purchase shares of B-category companies even if the companies pay less than a 5 percent dividend. Currently, only B-category companies paying a minimum 5 percent dividend qualify for margin finance.
Lower Minimum Account Threshold: The required minimum equity value in a Beneficiary Owner (BO) account to qualify for margin loans is set to be reduced to Tk 3 lakh from the current requirement of Tk 5 lakh held for a minimum of one year.
Higher Intermediary Lending Cap: Stockbrokers and merchant banks will be allowed to disburse margin loans up to five times their core capital or net worth, up from the existing cap of three times.
Removal of Free-Float Cap Requirement: The mandatory requirement for a listed company to maintain a minimum Tk 50 crore in free-float market capitalisation to qualify for margin loans will be scrapped.
Single Stock Exposure Limit Raised: The maximum margin exposure limit for a single stock is proposed to be increased to 20 percent from the existing 15 percent.
Adjustment to Maintenance Margin: A margin call will be triggered when a portfolio's value falls below 70 percent, down from the existing 75 percent threshold. The compulsory forced-sale trigger remains unchanged at 50 percent.
P/B Ratio Limits for Financial Institutions: While non-financial companies will retain the maximum Price-to-Earnings (P/E) ratio limit of 30, financial institutions will be evaluated using the Price-to-Book (P/B) ratio. Banks and financial institutions with a P/B ratio exceeding 3 will be excluded from margin financing, while insurance companies will face a P/B cap of 1.
The BSEC noted that the draft amendment was approved in principle during its 913th meeting and has been published to solicit public feedback and opinions from market stakeholders before finalization.