The Bangladesh Securities and Exchange Commission has set the opening price of shares of a newly listed company as its floor price.
The BSEC on Thursday sent a letter to the Dhaka Stock Exchange about the floor price of the upcoming companies, a senior BSEC official said.
A price floor is the lowest price at which a share can be sold.
On March 19, the BSEC set the floor prices for all listed companies on the basis of average of the closing prices of immediate preceding five trading days of March 19 to arrest free fall on the market amid the coronavirus pandemic in the country.
But, the commission had not mentioned about what would be the floor price a new company in the directive issued on March 19.
As per the new directive regarding the newly listed companies, the floor price of shares of a new company which would be listed under the fixed price method of IPO would be Tk 10 each, BSEC officials said.
So, the lowest prices of the shares of Express Insurance must be Tk 10 each, they said.
Under the book building method, the share prices set for the general investors after bidding would be considered as the floor price for a new company, they said.
So, the lowest prices of shares of Walton Hi-Tech Industries would be Tk 252 each.
The lowest price ceiling for a company coming from the over-the-counter market would be the last trading price on the OTC market.
Market experts said that the floor prices for the new companies were not prudent as the new companies should be given a few days to adjust their prices on the market.
Floor price should not be imposed on the companies from the first trading day, they said.
After the imposition of floor price system by the BSEC, the market came to a standstill as investors were reluctant to buy shares amid the pandemic and they also could not sell shares due to the price restriction.
BSEC officials said that the floor price system saved the market from a drastic fall and the system would be lifted soon after the situation improved.
Trading of shares of Sonali Paper Board and Mills, which was on the OTC market, will start on the main market on July 2.
The last trading price on the OTC market would be the floor price for the company on the main market.
In 2009, Sonali Paper was delisted and sent to the OTC market for non-compliance with securities rules and failure in providing dividends to its shareholders.
The commission headed by immediate past chairman M Khairul Hossain allowed the small capitalised company on the main market, going against the stock exchanges’ wish.
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