The Bangladesh Securities and Exchange Commission (BSEC) on Wednesday lifted floor prices of 169 stocks after they remained unmarketable for long due to lack of buyers.
The measure is expected to facilitate trading of the shares, thus increasing activities in the stock market.
However, the stocks will be allowed to decline only by a maximum of 1% from the previous day's closing price.
For example, if a stock closes at Tk100 on a Monday, it will go down up to Tk99 on Tuesday.
The upper-end 10% circuit breaker will remain unchanged, according to an order by the securities regulator.
The stocks that will be affected by the decision include Information Services Network Ltd, Aramit Cement, Ratanpur Steel Re-Rolling Mills Ltd; mutual funds, such as EBL First Mutual Fund, and ICB AMCL CMSF Golden Jubilee Mutual Fund; and insurance companies, such as Agrani Insurance Co Ltd, Janata Insurance, and Federal Insurance company.
Most of the companies are low-cap stocks and that is why, market insiders say, a major downward price movement would not have much impact on the index.
As many as 44 of the stocks, from the list, were below the face value of Tk10.
They include Familytex (BD), International Leasing, and FAS Finance. The possibility of these stocks going down further by 1% is highly unlikely because the minimum tick size is Tk0.10.
If the current market price of a stock is Tk7, a price reduction by 1% means the price quotation can go down by maximum Tk0.07 but a buyer will not be able to quote the price.
Twenty-nine of the 169 stocks, including Jute Spinners, Fine Foods, and BD Wielding, are above their floor prices. So, when the new decision comes into effect, the price movement of these stocks will also face the 1% restriction.
Earlier, stocks above floor prices could be corrected by up to 10%.
The floor price was imposed on March 19, 2020 for the first time by the immediate past exchange commission to arrest the free fall of the market amid the Covid-19 outbreak.
Its withdrawal in June next year was accompanied by other measures, including the imposition of the downward circuit breaker, to cool the volatile market.
The floor price was reintroduced on July 28 this year to prevent the cascading of stock prices against the backdrop of the global economic slowdown rendered by the Russia-Ukraine war.
Mohammad Rezaul Karim, spokesperson of the BSEC, said the latest move was aimed at helping investors reshape their portfolios.
"Those companies have become almost illiquid as the stocks are stuck at the floor prices," he said, adding that the policy change would boost daily transactions.