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Key Changes in Bangladesh’s New Margin Rules, 2025: BSEC’s Push for Market Stability
Key Changes in Bangladesh’s New Margin Rules, 2025: BSEC's Push for Market Stability
The Bangladesh Securities and Exchange Commission (BSEC) has introduced the Bangladesh Securities and Exchange Commission (Margin) Rules, 2025 through a Gazette notification on November 6, 2025. This new framework aims to mitigate systematic risk, ensure proper margin management, and protect investor interests in the capital market.
Major Implications and Highlights
- Maintenance Margin: Customer’s equity must not fall below 75% of the margin financing, or the Portfolio Value must not be less than 175% of the margin financing.
- Mandatory Margin Call: If the required margin level is breached, an immediate margin call must be issued via writing, email, SMS, or WhatsApp.
- Immediate Forced Sale: If the customer’s equity drops to 50% or the Portfolio Value falls to 150% or less, the Financer is obligated to immediately sell the necessary securities without issuing any prior notice.
- Capital Limit: Margin financers cannot provide margin financing exceeding three times (3x) their core capital or net worth.
- Governance: Mandatory formation of a minimum two-member Risk Management Committee and a qualified Research Team.
New Margin Financing Ratios & Eligibility
The rules introduce dynamic margin ratios tied to the overall market P/E and the client’s portfolio size:
- Market P/E Threshold: If the overall market Price-to-Earnings (P/E) ratio exceeds 20, the Margin Financing Ratio (Equity:Financing) is capped at 1:0.5.
- Portfolio Value Tiers:
- Portfolio Value Tk 5 Lakh to < Tk 10 Lakh: Ratio is max 1:0.5.
- Portfolio Value Tk 10 Lakh or more: Ratio is max 1:1.
- Life Insurance: Margin financing for listed Life Insurance companies is capped at 1:0.25, provided the company has an up-to-date actuarial valuation.
Restrictions on Marginable Securities
The list of eligible securities for margin financing has been strictly limited:
- Eligible Categories: Only ‘A’ and ‘B’ category shares listed on the Main Board are eligible.
- B-Category Clause: ‘B’ category shares are only marginable if the issuing company pays a minimum 5% annual dividend.
- Ineligible Platforms: Securities listed on the SME, ATB, or OTC platforms are strictly not marginable.
- Category Change Adjustment: If a margin-financed ‘A’ or ‘B’ category share is subsequently converted to the ‘Z’ category, or if the ‘B’ category company fails to pay the minimum 5% annual dividend, the financer must notify the client and compulsorily sell and adjust the securities within 60 trading days.
- Free Float Market Capital: Securities must have a minimum Free Float Market Capital of Tk 50 Crore.
- P/E Ratio: Securities with a Trailing P/E ratio exceeding 30 are ineligible (or double the sectoral median P/E, whichever is lower).
New Prohibitions for Financers and Clients
- Customer Eligibility: Margin financing cannot be extended to students, homemakers, or retired persons, unless they (homemakers, and retired persons) qualify as a High Net-Worth Individual (HNI).
- Minimum Investment: A client must have had an average minimum investment of Tk 5 Lakh over the preceding year to be eligible for new margin financing.
- Conflicts of Interest: Financers are strictly prohibited from extending margin to their own directors, employees, or their family members.
- Security Restrictions: Margin cannot be provided against locked-in, liened, or directors’ shares.
The new rules, therefore, mandate a more conservative, risk-averse, and transparent approach to margin trading, ensuring market stability and better investor protection.