SEC approves draft margin rules for merchant banks

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Refayet Ullah Mirdha
The Securities and Exchange Commission (SEC) approved Tuesday draft margin rules for the merchant banks for ensuring transparency in loan disbursement by them.
The approval to the margin rules came at a SEC meeting. Earlier, the SEC accepted a draft report on margin rules by a special committee July 31 last.
An official of the SEC, who attended the meeting, told the FE that there would not have any ratio for, or ceiling on, loan disbursement by the merchant banks. "Rather, the SEC will set rules relating to ratio, of, or ceiling on, loan disbursement to the customers by the merchant banks time to time in accordance with the nature of the stock market," said executive director of the SEC Farhad Ahmed.
According to the proposed provisions of the SEC, any employee, their near relatives, owners and members of the board of directors of the merchant bank will not be allowed to obtain any loan from the banks.
But directors and employees of any merchant bank will be able to draw loan from other merchant banks, the meeting sources said.
The SEC official told the FE that the regulatory body would observe the market and suggest action plans for correction in the stock market.
Farhad Ahmed said the SEC will publish the proposed margin rules of the merchant banks in newspapers seeking public opinion in this connection.
Afterwards, the rules will be published through a gazette notification, he said.
"The SEC hopes the rules will be in place soon. But it is difficult to set any specific timeframe for finalisation of the new provisions for the merchant banks," Farhad said.