No immediate plan to lift floor price for remaining stocks

Although the floor price for 66 companies have been withdrawn, there is no immediate plan for the remaining companies.

The commission has no plan to withdraw the floor prices for the remaining companies for the time being, according to sources at the Bangladesh Securities and Exchange Commission (BSEC).

On Wednesday, the benchmark DSEX index plunged 82 points or 1.54% triggered by the withdrawal of floor prices for 66 companies set by year ago when the market was falling due to the Covid-19 outbreak.

“The regulator withdrew the floor prices for the low-cap companies so that investors can sell their holdings at the desired level ahead of the Eid festival,” said a BSEC official.

The market suffered massive selling pressure following the decision as a group of investors apprehended that the BSEC will gradually lift the floor price of the remaining companies, according to stockbroker.

“The time is yet to come to withdraw the floor price,” capital market expert Professor Abu Ahmed told the Business Insider Bangladesh.

The floor price imposition was a good decision during the time, he said.

When the turnover of the Dhaka Stock Exchange will be around Tk 1,500-2,000 crore, the floor price can be withdrawn, he suggested.

DSE Director Shakil Rizvi said it would not be right to sell shares out of fear or rumors. “It is always good to invest after analysing the company’s financial performance,” he said.

The Bangladesh Securities and Exchange Commission (BSEC) has withdrawn the floor price from 66 companies imposed a year ago when the market was in free fall caused the first wave of the Covid-19 pandemic.

“In the interest of investors and to develop the stock market, the floor price guidelines were initially withdrawn from 66 companies,” said the in a statement on Wednesday.

At present 110 companies remain stuck in the floor price. Of these, 66 were withdrawn.

In March last year, the regulator set the floor prices of listed securities to arrest abnormal price fall. As per the guideline, the opening price of any listed security was fixed at the average of the closing price of immediate preceding five trading days of March 19, and the average price calculated for each security was considered as floor price and the lowest limit of the circuit breaker.

Under the floor price system, there is no scope for the buyers to securities at the desired prices.

Earlier, the regulator relaxed the floor price limit for the block market, which benefited the big investors.