BSEC Eyes Margin Loan Overhaul to Rebuild Investor Confidence

The Bangladesh Securities and Exchange Commission (BSEC) will overhaul the capital market's margin loan regulations within the next two weeks as part of a broader reform drive to restore investor confidence and revitalise the country's struggling stock market.

BSEC Chairman Masud Khan announced the move on Thursday while addressing a programme organised by the Capital Market Journalists Forum (CMJF) in Dhaka, saying rebuilding confidence among investors remains the regulator's foremost priority.

"A vibrant capital market is indispensable for sustaining Bangladesh's economic growth," Khan said, adding that the commission is pursuing a series of structural reforms to make the market more transparent, efficient and investor-friendly.

He said the revised margin loan framework would be introduced shortly to improve market discipline and support healthier investment practices.

Highlighting recent initiatives, the BSEC chief said the commission had already scrapped the long-standing floor price mechanism, taken steps to restore foreign investors' confidence and moved to resolve long-pending issues surrounding Global Depository Receipts (GDRs).

"The commission has already initiated a series of reforms aimed at making the stock market more efficient, transparent and investor-friendly," he said, noting that strengthening the regulator with experienced professionals had been one of his foremost priorities.

Khan also announced plans to delegate greater authority to the Dhaka Stock Exchange (DSE), enabling the bourse to act more swiftly against abnormal price movements, inactive listed companies and certain listing-related issues without requiring prior approval from the BSEC in many cases.

Describing the move as a significant step towards a more responsive regulatory framework, he said enhanced autonomy for the DSE would strengthen market surveillance and improve overall governance.

The BSEC chairman further said the commission had worked closely with the Finance Ministry during the formulation of the national budget to secure several tax incentives aimed at stimulating capital market growth. 

These include lowering the tax burden on inter-company dividends, removing investment restrictions on mutual funds, granting tax exemptions for zero-coupon bonds and introducing additional tax benefits for listed companies.

Reviving the country's mutual fund industry has also been identified as a key reform priority, he said. To achieve this, the commission is promoting professionally managed investment products, introducing licensed financial advisers, simplifying the initial public offering (IPO) process, facilitating direct listings of new companies and modernising regulations to make them more market-oriented.

Khan expressed optimism that the ongoing reforms would help rebuild investor trust, deepen the capital market and strengthen its role in mobilising long-term financing for Bangladesh's economic development.