The Bangladesh Securities and Exchange Commission (BSEC) has approved draft amendments to margin loan rules, proposing a unified financing ratio, a lower margin call threshold and relaxed eligibility criteria for certain listed securities in an effort to make leveraged trading easier for investors.
The regulator approved the draft amendment to the Bangladesh Securities and Exchange Commission (Margin) Rules, 2025 at its latest commission meeting and will soon publish it on its website for public opinion.
Under the proposed changes, the existing slab-based equity-to-margin loan ratio will be replaced with a single ratio of 1:1 for all eligible clients.
Currently, investors with portfolios worth Tk5 lakh to Tk10 lakh can receive margin loans at a maximum ratio of 1:0.5, while portfolios of Tk10 lakh or above are eligible for a 1:1 ratio.
BSEC Executive Director Md Abul Kalam told TIMES of Bangladesh, “The revised framework aims to simplify the margin financing structure by removing multiple slabs.”
The draft also proposes lowering the margin call threshold to 70 per cent from the existing 75 per cent.
A margin call is triggered when an investor’s equity falls below the prescribed level against the outstanding margin loan.
However, the threshold for forced selling of securities will remain unchanged. Margin financiers will still be allowed to sell shares to adjust accounts when an investor’s equity falls to 50 per cent of the margin loan.
The proposed amendments also relax conditions for securities eligible for margin financing. Currently, shares of both A and B category companies listed on the main board are eligible, but B category companies must pay at least 5 per cent annual dividends to qualify.
The draft removes this dividend condition, allowing both A and B category securities to qualify for margin loans without the minimum dividend requirement.
The regulator has also proposed changes to the criteria for selecting shares of banks, non-bank financial institutions and insurance companies for margin financing.
Currently, trailing price-to-earnings (P/E) ratios based on earnings per share (EPS) from the latest four consecutive quarters are used to determine eligibility.
Under the proposed framework, price-to-book (P/B) ratios will replace P/E ratios for banks and financial institutions. Shares of banks and financial institutions with a P/B ratio above 3 will not qualify for margin financing.
For insurance companies, the P/B ratio limit will be set at 1, meaning shares with a ratio above this level will not be eligible for margin loans.
The draft also changes the method for calculating P/E ratios. Instead of using the combined EPS of the latest four consecutive quarters, the regulator proposes using EPS from the latest audited annual financial statements.
According to BSEC, the change will ensure that share valuations are based on audited annual financial information rather than quarterly results.
The regulator will publish the draft amendments on its website for stakeholder feedback before finalising the changes.
