The securities regulator has revised margin loan ratios which recently were defined keeping pace with the movement of benchmark index of Dhaka Stock Exchange (DSE).
The Bangladesh Securities and Exchange Commission (BSEC) on Monday issued a directive on revised margin loan ratios which will come into effect from January 1, 2021.
The BSEC issued the directive cancelling its previous directive, which included revised margin loan ratio, issued on September 21.
As per revised ratio, margin loan will be distributed at a ratio of 1:0.75 if the DSE broad index DSEX exists below 4,000 points.
The ratio 1:0.75 indicates that a client having margin account will be provided with margin loan of Tk 0.75 against his deposit of Tk 1.0 if the DSEX exists below 4000 points.
The margin loan ratio will be 1:0.50 if the core index hovers between 4,001 points and 7,000 points.
And the ratio will be 1:0.25 if the DSEX is 7001 points or above.
"TREC (trading right entitle certificate) holders of the stock exchanges will extend maximum limit of credit facilities to their approved clients in the mentioned manner under the Margin Rules, 1999 until further order," said the BSEC directive posted on DSE website.
As per the loan ratio re-defined on September 21, margin loan was supposed to be distributed at a ratio of 1:1 if the DSEX exists below 4,000 points.
And margin loan ratio will be 1:0.75 if the benchmark index is between 4,001 points and 5,000, while the ratio will be 1:0.50 if the DSEX is between 5,001 points and 6,000 points and 1:0.25 if the index goes beyond 6,000 points.
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