SEC widens settlement time for junk shares

The stock market regulator has increased the settlement period for the
securities of companies with weak fundamentals under Z category by two days,
a move meant to discourage investors to bet on market laggards. The new
settlement period, T+9 , will replace the existing T+7. It means if an
investor buys junk shares today, he can sell the shares after 10 days from
the trading day. The Securities and Exchange Commission made the decision at
a meeting yesterday, chaired by its Chairman Ziaul Haque Khondker. As the
trend shows, retail investors tend to make speculative investment in Z
shares, pulling up the share prices of many weak companies and making the
market volatile, said SEC Executive Director Anwarul Kabir Bhuiyan. The
extended settlement time for Z companies will discourage the investors to
put money in fundamentally weak securities, as their money will remain idle
longer than before, the official said. "At the same time, the move will
encourage the weak companies to brighten their track-records, " he said. The
Dhaka Stock Exchange will have to amend its Settlement of Stock Exchange
Transactions Regulation before implementing the regulator's directive.