SEC to urge BB for raising lending capability of brokerage houses

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FE Report
The Securities and Exchange Commission (SEC) will urge the central bank for enhancing the lending capacity of the brokerage houses to increase fund flow to the market.
Currently, as per Bangladesh Bank Rules 2001, a broker is allowed to give loans upto Tk 10 million to their clients for buying securities.
"The SEC will request the Bangladesh Bank to increase the lending capacity of the brokerage houses to improve liquidity problem," Salahuddin Ahmed Khan, chief executive officer of the Dhaka Stock Exchange (DSE), told reporters after a meeting was held between Securities and Exchange Commission (SEC) and the bourse on Monday.
"The enhancement of credit limit is necessary under the present perspective as the market's size and its daily transaction have widened to a greater extent now than what was in 2001," he said.
SEC chairman Faruq Ahmad Siddiqi was present at the meeting as chief guest.
Presided over by DSE president Abdul Haque, the meeting was also attended by SEC member Mansur Alam, executive director Farhad Ahmed, DSE senior vice-president Saiful Islam, directors and members.
Khan said, the meeting identified that panicky psychology of the investors is one of major reasons of the current volatility in the market.
The meeting was told that the commission has given efforts to issue more licences for the merchant bankers in a move to bring an end to the monopoly of the few merchant bankers, he added.
Most of the investors are not well aware about the fundamentals and basic issues of the companies they are investing in, so it underscored the need for gearing up awareness building programmes, he said.
The meeting also put importance for appointing financial analysts in the merchant banks and brokerage houses so that the analyst can give opinions for their respective clients to pick up the securities with good fundamentals, he said adding that independent market adviser needs to be introduced as in India.