The securities regulator has not yet issued any fresh directive regarding mandatory settlement of negative equities of the capital market within December 31, 2022.
The Bangladesh Securities and Exchange Commission (BSEC) on Monday said this in a clarification amid an ongoing discussion regarding mandatory settlement of negative equities by the market operators.
"The news on bringing down the negative equities to zero by December this year have created confusions among the market operators," said a release issued by the securities regulator.
It said the previous directive regarding optional scope of provisioning against unrealised losses will remain effective till December 31, 2022.
Negative equity occurs when the value of securities falls below the outstanding balance on credits used to purchase those securities.
Asked, Mohammad Rezaul Karim, a BSEC executive director, said the existing directive has no mandatory provision to settle the negative equities within December 31, 2022.
"The market operators can appeal for further time extension after December 31, 2022. Then the regulator will take decision whether any new timeframe will be offered or not," said Mr. Karim, also the BSEC spokesperson.
Following the plea of market operators, the securities regulator on December 31, 2020 extended the timeframe for provisioning against unrealised losses incurred in portfolios of stock brokers and merchant banks and their clients for the seventh time till December 31, 2022.
In its release, the securities regulator said they have been working relentlessly to settle the problems of negatives equities of the stock market.
"Most of the market operators have already come out of the woods of negative equities availing capital supports from parent companies or selling the shares of portfolios having negative equities," said the securities regulator.
It said a small number of operators are yet to come out of the problems of negative equities.
"The BSEC expects that most of those investors will be able to solve the problem within short span of time," said the BSEC release.
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