SEC urges merchant banks not to go for forced selling

The securities regulator Tuesday requested the merchant banks not to go for 'forced selling' of stocks for the sake of the investors. Newly-appointed chairman of the Securities and Exchange Commission (SEC) Dr M Khairul Hossain made the call when a delegation representing the merchant bankers met him at his office. "The SEC chairman urged the bankers to refrain themselves from imposing forced selling of investors' shares on humanitarian ground," a participant of the meeting told the FE. During the meeting, the merchant bankers focused on some existing problems, which are currently holding them back from making fresh investments in the stock market. They said liquidity crunch, shallow capital base of merchant banks, speculations about upcoming budget and market monitoring, lack of coordination between the regulators of money market and capital market etc are the reasons for decline in stock prices. The merchant bankers also requested the regulator to create opportunities for foreign portfolio investments in the country. "We have requested the SEC to strengthen coordination among the securities regulator, the Bangladesh Bank (BB) and the National Board of Revenue (NBR) for ensuring smooth operation of the market," the meeting insider said. He said at the end of the meeting, the SEC chairman asked the bankers to submit proposals to the SEC regarding their problems and possible ways of solution. On the same day, the representatives of the Bangladesh Association of Publicly Listed Companies (BAPLC) held a meeting with the SEC. They recommended for bringing some structural changes in the stock market. "We have proposed formation of a separate bourse for the listed companies with small capital, whose prices sometimes soar without any valid reason," Salman F Rahman, the president of BAPLC, said. He said the large cap companies offering a small part of their shares should also be shifted to that bourse. In the meeting, the BAPLC representatives also made a proposal to fix the maximum reasonable PE (price-earning) ratio for each of the listed companies. "If the PE ratio of a company exceeds the maximum level, the investors would buy its shares on their own responsibility. The investors would not be provided any loan to purchase the shares of such companies," Rahman proposed. A K Azad, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), made a proposal to hold meetings among the high-ups of the Ministry of Finance (MoF) and the central bank, and other stakeholders in a bid to resolve the present problems of the market.