The Bangladesh Securities and Exchange Commission (BSEC) has set the maximum limit on margin loan facilities based on the movement of Dhaka Stock Exchange’s broad index, DSEX.
The stock market regulator issued a directive on Monday in this regard with effect from October 1.
The move was made by the commission to reduce the risk of general investors, its officials said.
According to the directive, merchant bankers, portfolio managers and brokerage houses at the DSE can provide margin loans to their clients based on the movement of DSEX.
If the DSEX falls below 4,000 points, the margin loan would be at the rate of 1:1, it said.
It means that the intermediaries can provide maximum Tk1 in loan against Tk1 of the client.
If the DSEX remains between 4,001 to 5,000 points, the clients of the intermediaries would get margin loans at the rate of 1:0.75.
If the index remains between 5,001 to 6,000 points, the intermediaries can give margin loans at 1:0.5 and for above 6,001 the rate would be 1: 0.25.