The Bangladesh Securities and Exchange Commission (BSEC) has relaxed some of the tighter margin financing rules introduced during the interim government period, allowing more investors and listed shares to access stock-market loans while keeping controls on excessive borrowing.
Under the amended BSEC (Margin) Rules, 2025, the regulator has restored the maximum PE ratio for margin-eligible shares to 40 from 30 and lowered the minimum investment requirement for opening a margin account to Tk3 lakh from Tk5 lakh.
The changes were issued through a gazette notification published on Monday.
Margin financing allows investors to buy shares using money borrowed from brokers or authorised financiers, with their own investment serving as security against the loan.
While the facility can increase purchasing power and market liquidity, excessive borrowing can magnify losses during market downturns.
The latest changes partially reverse the tighter margin regime introduced during the interim government period, when BSEC increased entry requirements and imposed stricter conditions on leveraged trading.
Under the 2025 rules, retail investors were required to maintain an average annual capital or investment of at least Tk5 lakh to qualify for margin loans. Investors with portfolios between Tk5 lakh and Tk10 lakh were eligible for a 1:0.5 margin ratio, meaning they could borrow half of their eligible investment value.
Those with portfolios above Tk10 lakh could access a maximum 1:1 margin facility.
The rules also required financiers to verify that applicants had regular sources of income, effectively restricting access for some non-earning investors such as students, homemakers and retirees.
The revised rules remove the Tk5 lakh threshold and allow investors to open margin accounts with Tk3 lakh.
BSEC has also expanded the pool of eligible shares by raising the PE ceiling.
Shares with a trailing PE ratio of up to 40 can now qualify for margin financing, compared with the previous limit of 30.
The 2025 rule lowered it to 30 from the previous ceiling of 40.
However, companies with negative earnings per share (EPS) will remain ineligible.
For listed life insurance companies, BSEC has replaced the PE test with a price-to-book value or PB ratio test. Their shares will not qualify if the PB ratio exceeds three or if net asset value is negative.
At the same time, the regulator has narrowed the types of securities that can be purchased through margin loans.
Previously, certain listed non-share securities, including mutual funds, debentures and bonds, could qualify for margin facilities if they met regulatory conditions.
Under the amended rules, margin financing is now limited to listed equity shares.
Margin financing remains prohibited for G, N and Z category securities, as well as securities listed on the SME, ATB and OTC platforms.
BSEC has retained the borrowing limit. A financier cannot provide a margin loan above an investor’s own equity, keeping the maximum loan-to-equity ratio at 1:1.
For example, an investor with Tk10 lakh of their own money in a margin account can borrow up to Tk10 lakh.
The regulator has also capped a financier’s total margin lending at four times its core capital or net worth and restricted exposure to any single stock to 20 per cent of its total outstanding margin portfolio.
The revised rules also set clear conditions for margin calls and forced selling.
If an investor’s equity falls below 50 per cent of the margin loan, the financier must issue a margin call, giving the investor three trading days to restore the required level.
If the investor fails to comply, the financier can sell shares to bring the account back within limits.
However, if equity falls below 25 per cent of the margin loan, the financier can sell securities without prior notice and must take action to protect the account.
Several provisions were changed after feedback from market stakeholders.
BSEC’s draft in July had proposed allowing financiers to lend up to five times their core capital or net worth, but the final rule fixed the limit at four times.
The regulator also softened the forced-sale provision. The draft proposed compulsory selling once equity fell below 50 per cent, but the final rules kept 50 per cent as the margin-call threshold and moved mandatory selling to the 25 per cent level.
The PE ceiling was also raised beyond the draft. While the proposal kept the limit at 30, the final rule increased it to 40.
The draft had also proposed applying PB criteria to non-life insurance companies alongside life insurers.
However, the final rules dropped that provision after objections that regulations should not dictate fund flows towards or away from specific sectors or securities.
