Bangladesh regulator reintroduces floor price as stocks continue to slide

The regulator withdraws a circuit breaker that limited the daily fall to 2 percent

Staff Correspondentbdnews24.com
Published : 28 July 2022, 02:16 PM
Updated : 28 July 2022, 02:16 PM

Bangladesh Securities and Exchange Commission has reintroduced floor price to stop a downward spiral of stock prices.

As the broad indices of the two bourses went into freefall, the regulator intervened on Thursday by issuing new temporary rules to control price swings in a bid to stabilise the market.

It reintroduced a new emergency circuit-breaker rule under which the average closing prices of any listed security over the preceding five days would be set as its floor price. If prices drop below the five-day average, it would automatically trigger a circuit breaker for an individual stock.

The regulator lifted a circuit breaker that limited the daily fall to 2 percent. The downward price change limits shall not be lower than the floor price now.

The floor price was introduced on Mar 19, 2020 after the coronavirus crisis hit Bangladesh. The regulator lifted the floor price 15 months later after the situation eased.

As import bills skyrocketed and the current account deficit widened due to the Russia-Ukraine war, inflation increased. The situation affected the share market, sending stocks down.

The DSEX, the main index of the Dhaka Stock Exchange, shed 57.49 points on Thursday to 5,980.51, a 14-month low, amid the freefall.

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