Stakeholders call for meeting with BSEC over margin rules

Capital market stakeholders — basically broker-dealers and merchant bankers — have called for a meeting with the Bangladesh Securities and Exchange Commission (BSEC) on the draft margin rules to address their objections.

To discuss the draft margin rules, the DSE Brokers Association (DBA), including the top 30 brokers, held a meeting with the Dhaka Stock Exchange (DSE) on Sunday, where they pointed out several observations on the rules that need to be addressed.

"That is why we, the DBA, requested the DSE to arrange a meeting with the capital market regulator as early as possible," said Saiful Islam, president of the DBA.

He said, "We welcome the reformulation of the margin rules, which was a long-standing demand of stakeholders, but there are some issues that need to be addressed in the new rules."

"Not only the DSE brokers but also merchant bankers, who provide margin loans to their clients, have agreed to discuss the margin rules before the rules are finalised," he added.

Recently, the BSEC published the draft margin rules, urging stakeholders to submit their opinions by 3 September. 

In the meeting with the DSE on Sunday, broker-dealers pointed out around a dozen observations on the draft policy, according to sources.

The draft rules mandate that if any marginable A-category stocks are downgraded to Z or B due to non-compliance, the shares must be adjusted within five days. Brokers argued that this is very unrealistic, as selling the shares within such a short time would negatively impact the market.

The draft rules also said retired persons are not eligible to avail margin loans. Brokers said it should be changed as well.

A broker said, the rules said that if any investors have at least Tk5 lakh on an average in a year, he will be eligible for margin loans. The ceiling should be increased to at least Tk30 lakh, said brokers.

A week before, the BSEC published a draft of the new "Margin Rules (Repeal), 2025," which stipulates that to take margin loans for buying shares, an investor must have an average investment of at least Tk5 lakh in a year.

According to the draft law published on 19 August, students, homemakers, and retired individuals who do not have a regular income cannot be granted margin loans. This decision considers their limited financial capacity and the need to ensure investment safety. 

Margin loans are loans provided by brokerage houses and merchant bankers to buy shares.