No decision yet on the floor price: President of the BSEC
No decision has been taken on revoking the price floor established to prevent the capital market from collapsing, Bangladesh Securities and Exchange Commission (BSEC) Chairman Prof. Shibli Rubayat-Ul Islam said after some Investors began selling shares for capital gains on a rumor that the price floor would be revoked.
“There have been rumors about the cancellation of the price floor, but the commission has not yet made a decision on this. There is a group trying to profit by spreading rumors, so I advise investors to remain vigilant and to disregard rumours,” Shibli said. Rubayat-Ul Islam, currently abroad to attend a conference, to The Business Standard by phone.
In July, the BSEC set a floor price to prevent stock prices from falling.
The letter published on July 28 by the BSEC reads: “The opening price of any listed security will be set at the average of the closing price on July 28, 2022 and the closing price of the four trading days immediately preceding and this calculated average price for each security will be considered as the floor price and the lower limit of the circuit breaker.”
In recent times, the war between Ukraine and Russia, the global energy and raw materials crisis, the deterioration of the currency exchange rate, as well as the conclusions of investigations regarding a large number of manipulated rallies in individual certificates between mid-2020 and the end of 2021 continued to hurt investor confidence.
Due to rumors of the revocation of the price floor mechanism, the price index rose at the start of trading yesterday, but fell late in the day due to downward pressure.
The commission imposed a similar price floor earlier on March 19, 2020 when the DSEX, the general index of the Dhaka Stock Exchange, plummeted from its 4,000 mark due to Covid-19 fears.
Later, the regulator allowed post-record date adjustments to lower the floor and gradually raised the floor price of some scrips and imposed a narrow-bottom circuit breaker instead.
Finally, in June 2021, the price floor was completely removed as the market had already boomed on a liquid money market and better than expected economic output during the pandemic.