Some changes in SEC direct listing rules proposed
Friday, 15 February 2008
Kayes M Sohel
A public limited company which will float its shares under direct listing regulations will have to sell all of its shares within 30 trading days aiming to minimise the manipulation risks.
A committee comprising representations from different stakeholders to amend the existing direct listing regulations Thursday proposed this in its first meeting held at the Securities and Exchange Commission (SEC).
The meeting proposed that in the first trading day 10 per cent of the total offloaded shares will have to be sold on weighted average price to only top ten financial institutions so that none can manipulate the price, sources said.
The meeting also proposed some other options to amend the Direct Listing Regulations with a view to removing weaknesses detected in the share trading of four state-owned companies, already listed under the said regulations, sources said.
The capital market watchdog has taken the move as it found some flaws in the regulations under which a group of investors were affected in the abrupt share price fluctuations of Jamuna Oil Company Limited, which made debut on January 9 last.
In a live programme on ETV, a private television channel, the SEC chairman Faruq Ahmad Siddiqi Thursday also agreed that the existing Direct Listing Regulations needs to be amended for the protection of small investors' interest.
"The meeting proposed changes in price building and modus operandi of direct listing regulations in a bid to make it more transparent," a meeting source said.
It recommended that the institutions will not be allowed to sell their purchased shares in the next seven trading days, they added.
The small investors will be allowed to purchase shares on the following day at a price 20 per cent above the circuit breaker which will be imposed on the basis of share prices to be bought by the institutional investors, sources said.
The committee will also sit early in the next week to discuss further about the issue and finalise the regulations by February 20.
The recommendations made by the committee about the direct listing regulations will be sent to the boards of Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) for approval.
The SEC will approve it after the two bourses' agree to it.
Per share of Jamuna Oil surged to Tk 952 against the face value of Tk ten only on the debut day of the issue on January 9 last but it abruptly dipped below Tk 350 per share in the subsequent days. And its lowest bid was Tk 58 per share in the debut trading day.
Headed by SEC member Mansur Alam, the committee includes managing director of Investment Corporation of Bangladesh Ziaul Haque Khondker, SEC executive directors Abdul Hannan Zoarder, Anwarul Kabir Bhuiyan and Farhad Ahmed, chief executive officer (CEO) of Dhaka Stock Exchange Salahuddin Ahmed Khan, CEO of Chittagong Stock Exchange AB Siddique, managing director of IDLC Finance Ltd Anis A Khan and managing director of AIMS of Bangladesh Yawer Sayeed.
"The committee will identify the merits and demerits of the regulations in the light of experiences gathered from four state-owned issues traded under the regulations in the country's bourses," he said.
The four state-owned companies- Dhaka Electricity Supply Company (DESCO), Power Grid Company of Bangladesh (PGCB), Jamuna Oil Company and Meghna Petroleum Limited-made debut in the country's stock markets under direct listing since June 18, 2006.
Earlier on February 23, 2006, the capital market regulatory body approved direct listing regulations for the bourses to encourage the local and multinational profit-making companies to raise fund from the capital market.
Under the regulations, the profit-making public limited companies were allowed to raise fund by getting listed directly with the bourses without floating primary shares.
A public limited company which will float its shares under direct listing regulations will have to sell all of its shares within 30 trading days aiming to minimise the manipulation risks.
A committee comprising representations from different stakeholders to amend the existing direct listing regulations Thursday proposed this in its first meeting held at the Securities and Exchange Commission (SEC).
The meeting proposed that in the first trading day 10 per cent of the total offloaded shares will have to be sold on weighted average price to only top ten financial institutions so that none can manipulate the price, sources said.
The meeting also proposed some other options to amend the Direct Listing Regulations with a view to removing weaknesses detected in the share trading of four state-owned companies, already listed under the said regulations, sources said.
The capital market watchdog has taken the move as it found some flaws in the regulations under which a group of investors were affected in the abrupt share price fluctuations of Jamuna Oil Company Limited, which made debut on January 9 last.
In a live programme on ETV, a private television channel, the SEC chairman Faruq Ahmad Siddiqi Thursday also agreed that the existing Direct Listing Regulations needs to be amended for the protection of small investors' interest.
"The meeting proposed changes in price building and modus operandi of direct listing regulations in a bid to make it more transparent," a meeting source said.
It recommended that the institutions will not be allowed to sell their purchased shares in the next seven trading days, they added.
The small investors will be allowed to purchase shares on the following day at a price 20 per cent above the circuit breaker which will be imposed on the basis of share prices to be bought by the institutional investors, sources said.
The committee will also sit early in the next week to discuss further about the issue and finalise the regulations by February 20.
The recommendations made by the committee about the direct listing regulations will be sent to the boards of Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) for approval.
The SEC will approve it after the two bourses' agree to it.
Per share of Jamuna Oil surged to Tk 952 against the face value of Tk ten only on the debut day of the issue on January 9 last but it abruptly dipped below Tk 350 per share in the subsequent days. And its lowest bid was Tk 58 per share in the debut trading day.
Headed by SEC member Mansur Alam, the committee includes managing director of Investment Corporation of Bangladesh Ziaul Haque Khondker, SEC executive directors Abdul Hannan Zoarder, Anwarul Kabir Bhuiyan and Farhad Ahmed, chief executive officer (CEO) of Dhaka Stock Exchange Salahuddin Ahmed Khan, CEO of Chittagong Stock Exchange AB Siddique, managing director of IDLC Finance Ltd Anis A Khan and managing director of AIMS of Bangladesh Yawer Sayeed.
"The committee will identify the merits and demerits of the regulations in the light of experiences gathered from four state-owned issues traded under the regulations in the country's bourses," he said.
The four state-owned companies- Dhaka Electricity Supply Company (DESCO), Power Grid Company of Bangladesh (PGCB), Jamuna Oil Company and Meghna Petroleum Limited-made debut in the country's stock markets under direct listing since June 18, 2006.
Earlier on February 23, 2006, the capital market regulatory body approved direct listing regulations for the bourses to encourage the local and multinational profit-making companies to raise fund from the capital market.
Under the regulations, the profit-making public limited companies were allowed to raise fund by getting listed directly with the bourses without floating primary shares.