The High Court on Wednesday issued a rule asking the government and the Bangladesh Securities and Exchange Commission to explain within seven days why several sections of the Margin Rules 2025 should not be declared unconstitutional and void.
The bench of Justice Fahmida Quader and Justice Md Ashif Hasan, however, declined to grant a stay order on the newly introduced margin rules, said writ petitioners’ lawyer Md Kamal Hossain.
The respondents include the Finance Ministry, the Financial Institutions Division, Bangladesh Bank, the securities regulator BSEC, the Financial Institutions Division additional secretary overseeing capital markets and the Dhaka Stock Exchange.
Four investors — S M Iqbal Hossain, Md Saidur Rahman, S M Fakrul Islam and Mohammad Selim — filed the writ on Sunday, arguing that the rules are unconstitutional and harmful to investors, and registered under writ 18539/2025.
The disputed provisions
The petition challenges Sections 6(5), 6(6), 6(9), 7(5), 7(6), 7(7), 9, 10 and 11, 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 Tk 10 lakh exposure.
Life insurance shares are capped at 1:0.25 and can be margin-financed only after 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 offloaded 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 has allowed six months for executing forced share sales linked to the new rule adjustments.
Stocks continue bleeding
Amid the legal and regulatory uncertainty, the stock market extended its slump, deepening investor losses.
The benchmark DSEX had already lost over 5% in October and has declined by another 5% so far in November, reflecting sustained market weakness.
The index dropped 47.4 points or 0.97% to close at 4,825 on Wednesday.
The index opened higher but reversed direction as selling pressure intensified throughout the day.
Turnover fell 14.6% to Tk 290 crore, marking a four-month low.
Engineering led turnover with a 13.1% share, followed by Pharmaceuticals 13.1% and Textiles 10.7%.
All sectors finished lower, with Jute losing 4.2%, Life Insurance shedding 3.7% and Mutual Funds declining 3.4%.
Of the 397 issues traded, 299 declined while 52 advanced and 46 remained unchanged.
