The High Court on Tuesday rejected the second writ challenging the new margin rules in the stock market, citing redundancy.
Petitioner’s lawyer Md Kamal Hossain told The TIMES of Bangladesh that the writ petition filed by two stock investors earlier this week was set for hearing on Tuesday by the High Court bench of Justice Sikder Mahmudur Razi and Justice Raziuddin Ahmed.
However, the writ petition was rejected as the Court referred to the first one filed by four different investors last week challenging the same rules of the Bangladesh Securities and Exchange Commission (BSEC).
Earlier, on Monday the High Court bench had issued an injunction order on forced selling from leveraged stock accounts and also recalled it after a short while.
According to the lawyer, no date was fixed yet for hearing the first writ filed by four investors — S M Iqbal Hossain, Md Saidur Rahman, S M Fakrul Islam, and Mohammad Selim — on 9 November.
Rejecting their plea for a stay order on 11 November, the bench of Justice Fahmida Quader and Justice Md Ashif Hasan issued a rule asking the Government and the BSEC to explain within seven days why several sections of the Margin Rules, 2025, should not be declared unconstitutional and void.
According to High Court sources, the respondents were yet to reply to the rule as of Tuesday.
What the petition challenged
The petition challenges Sections 6(5), 6(6), 6(9), 7(5), 7(6), 7(7), 9, 10 and 11 of the BSEC Margin Rules, 2025, citing violations of fundamental rights guaranteed under Articles 27, 31 and 44 of the Constitution.
Section 6(5) limits margin loan agreements to one year with renewal subject only to mutual consent, while Section 6(6) allows lenders to force sell securities if agreements are not renewed within 30 working days.
Section 6(9) restricts students, housewives, and retirees from margin loans unless they qualify as high-net-worth individuals with proven income, a clause the petition terms discriminatory.
Section 7(5) fixes margin financing at 1:1, lowering it to 1:0.5 when the market price-to-earnings ratio crosses 20, and imposes the same 1:0.5 cap for Tk 5 lakh to 10 lakh exposure.
Life insurance shares are capped at 1:0.25 and can be margin-financed only after an updated actuarial valuation.
Section 9 mandates investor equity of at least 75% of total margin exposure, with borrowers required to top up within three days of a margin call or face trading suspension and forced liquidation.
The rules also disqualify all stocks outside ‘A’ and ‘B’ categories from margin loans and require ‘B’-category shares to be off-loaded from margin accounts if a company fails to declare at least 5% dividends within 60 working days.
Section 11 sets Tk 5 lakh as the minimum annual investment threshold for margin loan eligibility.
The regulator BSEC allowed six months for executing forced share sales linked to the new rules adjustments.
Stock market remains volatile
Amid the legal and regulatory uncertainty, on top of the cloudy political environment and export uncertainties, the stock market had been falling since 8 September, eroding almost the entire gains from the rally over the previous three months.
However, hitting a psychological low of 4,620, the DSEX bounced back on Sunday. Amid expectations of a favourable outcome from the High Court, bargain hunters pushed the market to 4,846 during the closing bell on Tuesday.
Stockbrokers said forced selling was a major reason for the recent sell-off.
