Regulator lifts floor prices of all shares

The country's stock market has returned to standard price movement system, as the securities regulator has lifted floor prices of all listed securities, set earlier to contain abnormal price fall amid the Covid pandemic.

The Bangladesh Securities and Exchange Commission (BSEC) issued a directive on Thursday, which repealed all the previous directives regarding floor prices.

As per the latest directive, the normal price change limit - ranging from 3.75 per cent to 10 per cent - will be applicable to all the listed securities.

The standard price change limit will also be applicable to the newly listed companies from the day of debut trading.

The floor price of a listed security was the average of closing price of immediate preceding five trading days of March 19, and that average was also treated as the lowest limit of the circuit breaker.

The prices of the listed securities were not allowed to go down below the respective floor prices.

Mohammad Rezaul Karim, a BSEC executive director, said the regulator lifted the floor prices, following the normalcy observed in the stock market.

"The floor prices were set to contain abnormal price fall following the Covid-19 outbreak. A restriction, which hampers normal movement of the market, cannot be allowed for a long time."

He also said the flow of liquidity was affected, as many investors were not able to sell or purchase securities due to floor prices.

"We hope the withdrawal of floor prices will boost the turnover value," Mr Karim added.

Presently, prices of the newly listed companies were allowed to rise up to 50 per cent for the first two sessions.

Following the directive issued on Thursday, the price change limit of the newly listed companies will also be 10 per cent instead of 50 per cent from the day of debut trading.

Earlier, due to a directive of the securities regulator, both the bourses set floor prices for all the listed securities on March 19 to contain abnormal price fall, triggered by the Covid-19 outbreak.

Later, the floor prices were adjusted for those listed securities, which issued rights shares and stock dividends due to dilution effect.

On April 7, floor prices of 66 listed securities were lifted. On the following day, the DSEX, broad index of the Dhaka Stock Exchange (DSE), posted a sharp loss of 1.55 per cent or 83 points to close at 5,254.77.

On April 10, the securities regulator again imposed floor prices of those 66 securities, setting 2.0 per cent downward price change limit.

On June 30, the BSEC lifted the floor prices of 30 listed securities, setting 2.0 per cent downward limit, based on the reference price or closing observed in the previous session.

The latest directive on Thursday has repealed all the directives regarding floor prices, and the standard price change limit will be applicable to all the listed securities including the newly listed ones.