Newly-listed companies would have a circuit breaker placed on their share prices from their debut trading session, said Bangladesh Securities and Exchange Commission on Tuesday. The decision to impose circuit breakers on the stock prices of debutant companies came from a meeting of the commission, led by its chairman M Khairul Hossain, at its office in Dhaka, according to a BSEC press release. On the first trading session, a 50-per cent circuit breaker would be imposed on the issue price of the debutant company’s shares. On the second trading session, the circuit breaker of 50 per cent would be imposed on the reference price or first day’s closing price or on the adjusted open price. Circuit breakers would be imposed at usual rates from the third trading session.
‘NRB investors were entitled to get quota in initial public offering and other investors used to sell IPO shares on the very first trading session, taking advantage of the high trading prices of IPO shares on the first trading session,’ the BSEC said.
As a result, the IPO shares failed to retain the initial prices afterwards and thus caused losses for general investors and subsequently distorted normalcy of the capital market, the BSEC said. The commission made the decision following a proposal from the Dhaka Stock Exchange. At the meeting, the commission also decided to allow stock dealers to extend the staggering facility in keeping provision against their unrealised losses in mutual funds.
The financial institutions, mutual funds and merchant banks has been enjoying the staggering facility, the BSEC press release said, adding that the facility was extended to the stock dealers based on request from the DSE Brokers Association. On Tuesday’s meeting, the BSEC also extended the deadline to rectify beneficiary owners’ account related information to December 31, 2019. Earlier on June 20, 2019, the commission asked the depository participants to rectify BO Account related information as the regulator found identical national identity numbers, mobile numbers and bank account numbers used for operating different BO accounts.
Source: New Age, 06.11.2019