The Bangladesh Securities and Exchange Commission has imposed the regular circuit breaker on any newly listed company from the first trading day, replacing the maximum 50 per cent price movement in the first two trading sessions.
The BSEC issued an order in this regard on May 6.
As per the regular circuit breaker, if the share price is between Tk 10200, the price of the company can be changed by a maximum of 10 per cent, and if the share price is between Tk 200-500, it can be changed by a maximum of 8.75 per cent everyday.
If share price stays between Tk 501-1,000, the circuit breaker will be 7.5 per cent, for a price between Tk 1,001-2,000, the circuit breaker will be 6.25 per cent, for that between Tk 2,001-5,000, it will be 5 per cent and if the price crosses Tk 5,000, it will be 3.75 per cent.
Earlier on November 14, 2019, the BSEC issued an order setting the standard upward and downward price change limits where it said that the circuit breaker must be imposed on any newly listed security from the first trading day.
For the first trading day, the circuit breaker had been set at 50 per cent on the issue price and for the second day, at 50 per cent on the first trading day’s closing price.
The regular circuit breaker had been imposed from the third day.
However, the commission has now scrapped the 50 per cent price change limit and imposed the regular circuit breaker.
Issue price of companies which come through the fixed price method will be Tk 10 while the price for companies coming through the book building method would be set by eligible investors’ bidding.
BSEC commissioner Shaikh Shamsuddin Ahmed told New Age that the commission made the decision as it observed that share prices of newly listed companies rose ‘peculiarly’ in the first few sessions.
He said that the surge created discrimination on the market as the prices of other companies rose at a maximum of 10 per cent.
‘We cannot allow any privileges to newly listed companies,’ he said.
After the surge, the errant investors dumped their shares on the general public and made an exit from the company, the commissioner said.
Only these wrongdoers get the benefit of the 50 per cent share price movement and leave the other investors in distress, he said.
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