Settlement period reduced

FE ReportThe securities regulator has decided to reduce the settlement cycle of shares' transaction, except 'Z' category shares, to T+2 from T+3 following a proposal made by both the bourses, officials said. The decision came Tuesday at a commission meeting chaired by the Securities and Exchange Commission (SEC) chairman Professor M Khairul Hossain. The new settlement period will be effective after a joint meeting between the two bourses. Meanwhile, the SEC has approved the initial public offering (IPO) of GBB Power Limited, which will offload shares worth Tk 820 million under fixed price method. The offer price of GBB Power Limited has been fixed at Tk 40, including a premium of Tk 30 for ten taka shares each. Recently, Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and retail investors made a proposal of reducing settlement cycle in an effort to increase liquidity flow in the stock market. The SEC Executive Director Farhad Ahmed said after the implementation of reduced trading cycle, purchased shares will be matured within two days after the date of purchasing shares and investors will be able to sell out these on the third day. Presently, investors are allowed to sell shares out of 'A', 'B' and 'N' category shares on the fourth day in accordance with T+3 trading cycle. On the other hand, 'Z' shares category can be sold out on the tenth day of making purchase as per T+9 trading cycle. When asked, whether the market would face any sell pressure due to reduced settlement cycle as presently sellers' side is stronger, Mr. Ahmed denied and said moreover the efficiency of settlement cycle will be increased. Echoing Mr. Ahmed, former SEC chairman AB Mirza Azizul Islam and stock market expert Professor Salauddin Ahmed Khan said the reduced settlement cycle would help the market to be more developed and efficient. But some other market experts expressed concern on the condition of anonymity that the maket may face more sell pressure riding on SEC's latest move as most investors presently prefer an exit way.