No decision on floor price yet: BSEC chairman
Investors are advised to stay alert and not pay heed to rumours
No decision has been taken on revoking the floor price established to prevent the collapse of the capital market, said Bangladesh Securities and Exchange Commission (BSEC) Chairman, Professor Shibli Rubayat-Ul Islam, after some investors started to sell shares to realise capital gains on a rumour that the floor price would be revoked.
"There have been rumours about cancelling the floor price, but the commission has not taken any decision on it yet. A group is trying to profit by spreading rumours, so I advise investors to stay alert and not pay heed to rumours," said Shibli Rubayat-Ul Islam, currently abroad to attend a conference, to The Business Standard over the phone.
In July, the BSEC set a floor price to prevent the fall of share prices.
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The letter issued on 28 July by the BSEC reads, "Opening price of any listed security shall be set at the average of the closing price of 28 July 2022 and closing price of immediately preceding four trading days and this average price calculated for each security shall be considered as the floor price and lowest limit of the circuit breaker."
In recent times, the Ukraine-Russia war, the global energy and commodity crisis, deteriorating exchange rate of currencies, as well as investigation findings regarding a large number of manipulated rallies in individual scrips over the mid-2020 to late-2021 period kept hurting investor confidence.
Due to rumours of the floor price mechanism being revoked, the price index rose at the beginning of yesterday, but fell by the end of the day due to sell-off pressures.
The commission imposed a similar floor pricing earlier on 19 March 2020 when the DSEX, the broad-based index of the Dhaka Stock Exchange, was in free fall from its 4,000 mark due to Covid-19 fears.
Later, the regulator allowed post-record date adjustments to lower the floor and gradually lifted the floor price for some scrips and imposed a narrow bottom circuit breaker instead.
Finally, in June 2021, the floor pricing was completely withdrawn as the market had already shot up riding on a liquid money market and better than expected economic output during the pandemic.
