The Bangladesh Securities and Exchange Commission (BSEC) has given additional time to seven more market intermediaries to ensure compliance with provisioning requirements for unrealised losses and adjustments to negative equity.
The extension will take effect after December 31, when the current deadline for compliance expires.
Under the new arrangement, some institutions have been given one more year, while others have been allowed two additional years. In certain cases, extensions have been granted all the way through 2032.
The regulatory decision came at a meeting of the BSEC on Wednesday, chaired by its Chairman Khondoker Rashed Maqsood.
According to the BSEC, the extensions were granted based on the action plans submitted by the affected intermediaries -- stockbrokers, dealers, and merchant banks -- which were subsequently endorsed by their respective boards.
The firms are Shyamol Equity Management, Synthia Securities, Mika Securities, Eminent Securities, Meghna Life Securities & Investment, BDBL Securities and SIM Capital.
BSEC spokesperson Md Abul Kalam said the market intermediaries with comparatively lower levels of negative equity would have a shorter period to regularise their positions, while those with greater levels of negative equity would have longer extensions.
So far, the BSEC has extended deadlines for 56 market intermediaries to adjust negative equity under board-approved roadmaps
"Some other market intermediaries with negative equity will need to submit their action plans by the end of this year," Mr Kalam said.
In April, the BSEC instructed stockbrokers, dealers, and merchant banks to submit implementable roadmaps by September, outlining strategies for addressing long-standing negative equity issues that have impeded market growth for over a decade.
As of October, outstanding negative equity against margin loans stood at Tk 150 billion.
Under the regulator's latest approval, the institutions must complete full provisioning and negative equity adjustment within the extended deadlines.
The BSEC said intermediaries receiving additional time must submit quarterly progress reports until the issue is fully resolved.
The firms are also required to disclose their negative equity and unrealised losses in their financial statements based on IFRS accounting standards.
The regulatory order also imposed several restrictions, including a bar on share purchases in beneficiary owner (BO) accounts with negative equity. Only share sales will be allowed in margin accounts for adjustment during the extended period.
No interest will be charged on margin loans, nor will management fees be collected from BO accounts with negative equity. Intermediaries are also prohibited from declaring or distributing dividends during this period.
Moreover, no new negative equity may be created. If unavoidable circumstances lead to negative equity, full provisioning must be completed within the relevant financial year. Any information requested by the securities regulator must be provided within seven days.
The regulator, however, relaxed a provision relating to net-worth shortfalls arising from provisioning for unrealised losses or adjusting negative equity.
"The market intermediaries that fail to keep provisions for unrealised losses and negative equity adjustment within this given timeframe will face regulatory action," said Mr Kalam.
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