BSEC cuts circuit breaker limit on SME Index

The Bangladesh Securities and Exchange Commission (BSEC) on Thursday cut the circuit breaker limit to 10% from 20% on the trading of companies listed on the Small Capital Platform Index (DSMEX) of the Dhaka Stock Exchange (DSE), to be effective from the next trading day.

According to a BSEC directive, shares of the companies on the DSMEX can rise or fall by a maximum of 10% in a day.

The DSMEX jumped by 95% to reach 1,573 points in the last few working days till 5 March as investors' participation increased due to a waiver from the registration requirement for trading on that platform.

As a result, shares of eight companies listed on the SME platform rose by 20% daily. However, in response to the DSE's notice, the companies said that there was no price sensitive information behind the unusual share price increase.

But, in the last two days, the DSMEX lost 84 points due to the massive sell-off from the profit booking qualified investors.

The new circuit breaker has been introduced to control the unusual rise and fall of the stock and to reduce investment risk, said a senior BSEC official.

On 28 March, the DSE board removed the registration requirement for becoming a qualified investor to increase participation in its SME platform.

According to the decision, the DSE will automatically register an investor if it has an investment of Tk20 lakh in its portfolio.

Earlier on 17 February, BSEC reduced the investment in the stock market from Tk50 lakh to Tk20 lakh to become a qualified investor in a bid to increase participation in the SME market.