Stockbrokers asked to stop considering index for margin loans

Mon Nov 15, 2021 09:35 PM Last update on: Mon Nov 15, 2021 09:38 PM

The stock market regulator has ordered the stockbrokers and merchant bankers not to consider the index at giving margin loans to investors.

Today, Bangladesh Securities and Exchange Commission (BSEC) issued an order saying that TREC (Trading Right Entitlement Certificate) holders of the stock exchanges may extend credit facilities at 1:0.80 basis.

Meaning, clients can get a margin of up to 80 per cent of their deposits.

“The decision has been taken considering the interest of the investors.”

The margin can be given to buy stocks whose price-earnings ratio is lower than 40.

The BSEC rearranged the margin loan policy last year tagging index movement. As per the latest order, investors were allowed to get loans up to 80 of their deposits until the benchmark index of the Dhaka Stock Exchange (DSE) touch 8,000 points.