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marginable securities, meaning margin loan facilities will not be
given against the under-performing companies' stocks. Also, shares of
the companies, which will fail to submit their annual reports within
stipulated time, will not be treated as marginable securities.
Marginable security means a stock that can be purchased on margin
loan provided by brokerage houses and merchant banks. Stock market
regulator took the decisions at a meeting yesterday as a part of
tightening the existing margin rule, which allows a broker or a
merchant bank to provide loans against any company's shares. "The
margin rule has been tightened for weak-performing companies, as loan
on such companies often makes the stocks overpriced and creates
disturbance in the market," said Anwarul Kabir Bhuiyan, executive
director of Securities and Exchange Commission (SEC). "Notifications
to this effect will be issued next week," he said. Market operators
said they do not offer margin loan facilities against junk or Z
category shares except those for some companies, which are actually
fundamentally strong but remain in the Z category either for legal
issues or for not giving dividends. Although the SEC earlier asked the
stock exchanges to make a list of marginable securities, the bourses
could not do so. "As the bourses failed to make the list, we as a
regulator are doing it," Bhuiyan said. The SEC also decided not to
give margin facilities for the first 30 trading days to any newly
listed companies, and securities that will be upgraded or downgraded.
The commission initiated a move to prepare margin rule for merchant
banks, which are now following their own guidelines to provide loans.
The existing margin loan is applicable only for brokerage houses. The
SEC has also eased the existing refund warrant system. From the next
IPO (initial public offering), the issuer company will send the
refund warrants to the unsuccessful IPO applicants' bank accounts
directly. Under the existing system, the refund warrants are sent to
the IPO applicants' mailing addresses. The SEC also formed a
three-member probe committee to investigate transactions of Marico
Bangladesh, which made debut on the bourses on September 16. "The
commission did not feel comfort at the higher prices of Marico share
and transactions," Bhuiyan said. On its debut, each Marico share of
Tk 10 was traded as high as Tk 368. However the company in
addition to the face value took Tk 80 per share as premium. Each
Marico share rose as high as Tk 459 yesterday before closing at Tk
450.20 on Dhaka Stock Exchange. The SEC asked the probe body to
submit its report within the next 15 working days. The watchdog has
also selected 48 companies, whose trading is now suspended, for
over-the-counter (OTC) market, a separate trading floor for trading
junk shares introduced on DSE on September 6. "We will direct the
stock exchanges within one or two working days to transfer 48
companies to the OTC market," Bhuiyan said.
