DHAKA: The Securities and Exchange Commission ordered all the listed companies on the stock market to adjust their margin loans based on market value and Net Asset Value (NAV) by September 30.

The decision came from a meeting of SEC’s market-review committee with Dhaka and Chittagong stock exchanges and Merchant Bank Association Sunday.

According to the new system, the investors will get loan facility based on market value and NAV.

SEC spokesman and Executive Director Anwarul Kabir Bhuiyan told reporters that the stock regulator gave Dhaka Stock Exchange (DSE) the responsibility of fixing the margin loan following the system.

DSE would decide every last day of the week the amount of loan the merchant banks and brokerage houses can disburse against shares. The merchant banks and brokerage houses will follow the loan ratio fixed by the premier bourse, DSE.

Meeting-insiders said merchant banks, however, proposed re-fixation of margin-loan ratio relaxing the SEC’s directive on the issue.

The system would be a cause of the market fall, as the customers might leave huge amounts of shares on “forced sale” from their portfolio, according to merchant banks.

They demanded extension of the deadline for implementing the system for margin-loan ratio.

The SEC officials said the shareholder investments are now in a risk due to successive market hikes.
“It is a negative sign for the national economy as a huge amount of money came to the share market from the productive sectors. The investors will be affected if the authorities go for market correction,” said one of the officials.

The NAV-based margin-loan system is being made effective for the sake of general investors, they added.

BDST: 2133 HRS. SEP 5, 2010