BSEC extends credit facilities further to investors

Bangladesh Securities and Exchange Commission (BSEC) has relaxed credit facilities norms further to encourage brokers from providing excessive discretionary leverage to their clients.

Considering the Covi-19 pandemic, the brokers of the stock exchange are allowed to extend the maximum limit of credit facilities to their clients, said a BSEC directive on Friday.

Under the newly revised limit, a lender can offer a margin loan at a maximum ratio of 1:0.80 if the DSE benchmark index, DSEX, remains below 8,000 points, while the margin loan ratio will be 1:0.05 if the DSEX remains above 8,000 points, according to the directive.

That means an investor will get 80 paisa against the investment of Tk 1 up to the level of the index. The new directive will go into effect from Sunday.

In April, the regulator increased the margin credit limit from 1: 0.50 to 1: 0.80 to the DSEX 7,000 points.

On September 21 last year, the BSEC first framed new margin loan norms in coordination with the index. Previously, the margin ratio was 1: 0.50.

The brokerage houses and merchant banks were allowed to lend margin loans to their clients at a maximum rate of 1: 1 when the DSEX index remained below 4,000.