The Bangladesh Securities and Exchange Commission (BSEC) has re-imposed floor price on 169 listed securities that had price restriction withdrawn in December last year.
As per the new directive issued on Wednesday by the securities regulator, the opening prices of the securities will be set at the floor price determined in July 2022, or the average of the closing market prices in the last four sessions through Wednesday, whichever is lower.
For example, the floor price of Savar Refractories was set at Tk261.10 as per the previous directive issued on July 28, 2022.
The company's average closing price of the last four sessions stands at Tk215.55. So, the revised floor price will now be Tk215.55.
The other conditions, including the upward price increase limit at 10% a day, will remain unchanged.
The regulatory decision came after the stakeholders' insistence that all stocks should be subject to the same policies, said Mohammad Rezaul Karim, a BSEC executive director.
The floor price had been replaced by a downward circuit breaker in December allowing the stocks to fall up to 1% in a single trading session.
Karim said a large number of the securities had seen price erosion and dropped to the level of margin call since December.
As of Wednesday, 128 of the stocks, which were subject to the partial removal of floor price, lost their market value, 14 saw price rise marginally while 26 remained stuck at floor price.
The downward price movement restriction was first imposed on March 19, 2020, setting the average prices of the preceding five days as floor prices to stop the index from falling amidst the pandemic.
The measure was criticized by most analysts and foreign investors, prompting the regulator to start moving away from it in phases from April 2021.
Again macroeconomic adversities following the Russia invasion in Ukraine induced a bearish sentiment in the capital market, which propelled the stock market regulator to re-impose the restriction in July last year.
The policy was withdrawn for 169 companies in December last year as the securities had long been languishing at the floor prices and investors were unable to sell shares.
One of those, closed-end NLI First Mutual Fund, however, had already been delisted.
The relaxation of the price restriction was expected to boost liquidity flow.
Meanwhile, the Bangladesh stock market has been treated as a special case by Morgan Stanley Capital International since February 7; the global index provider conveyed that the illiquidity issue of the market deprives investors of exit opportunities.
