DSE for keeping member's margin deposit provision unchanged

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FE Report
Dhaka Stock Exchange (DSE), the country's prime bourse, has demanded to keep the member's margin deposit provision unchanged to avoid operational complexities.
DSE president Shakil Rizvi placed the demand with the Securities and Exchange Commission (SEC) Monday following the regulator's latest directive on increasing the DSE member's margin deposit.
A DSE official said most of the DSE members strongly protested the SEC directive saying that it would lead to unavoidable hassles in stock trading.
As per revised rule, no member will be allowed to cover more than 50 per cent of required margin deposit through bank guarantee.
Earlier, DSE members were able to cover 10 per cent of member's margin by cash, pay order, FDR (fixed deposit receipt) or other securities and remaining 90 per cent through bank guarantee.
"After a certain time period of trading session the members are likely to stop their trading as they will not be able to cover more than 50 per cent of the margin through bank guarantee," a DSE member said.
"The problem is likely to arise as many investors trade under netting system without giving cash money," he added.
According to revised margin deposit requirement, from now on the members of the stock exchanges will have to deposit 40 per cent instead of 20 per cent if they transact exceeding free limit of Tk 50 million.
Members of the stock exchanges will have to deposit 60 per cent instead of 30 per cent of the amount of transaction that should be more than Tk 10 million taka but less than Tk 20 million over the free limit.
The SEC increased the deposit limit to 80 per cent from 50 per cent of the transaction worth more than Tk 20 million but below Tk 40 million over the free limit.
A member will have to deposit 100 per cent in case of transaction worth more than Tk 40 million over free limit.
However, the SEC said the amount of member's margin deposit has been increased for the sake of investors' safety.
"The DSE has proposed to consider its proposal and the commission will take a decision on it," Mansur Alam told the FE.
"If the commission does not consider the proposal the bourses will have to comply with the regulator's decision," he said.
According to SEC's decision, the revised member's margin requirement is supposed to come into effect from December 5.