FE Report
The securities regulator will probe into alleged non-compliance of rules in terms of maintaining margin loans by evaluating closing price of a stock and its net asset value (NAV), officials said.
An official of the Securities and Exchange Commission (SEC) said the regulator's directive on margin loan maintenance has been, allegedly violated by brokers and merchant banks.
According to the SEC directive, the brokers and merchant banks, for example, will give Tk 15.0 as margin loan, if the average value of closing price and NAV of any securities is 10, as per the previous loan ratio of 1:1.5. But according to the latest margin loan ratio of 1:1, the amount of margin loan will be Tk 10.
"It's not correct that an investor will get a margin loan of Tk 10 against his deposit of Tk 10 to comply with the loan ratio of 1:1," the SEC official said.
"The investors will get margin loan against the evaluation of their shares' value," he said.
The official said the SEC inspection teams would probe into the violation of securities rule, and would summon the responsible persons for hearing. "If their replies are not satisfactory, the regulator will fine them," he said.
On Thursday, the SEC reset the margin loan ratio at 1:1 from 1:1.5 for the brokers and merchant bankers in a move to cool down the overheated market. The securities regulator has stepped in to calm the market in its latest move.
On June 15, the price-earning ratio was lowered to 40 from 50 for availing the margin loans.
SEC to probe margin rules violations
FE Team | Published: July 11, 2010 00:00:00 | Updated: February 01, 2018 00:00:00
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