Beximco, Islami Bank set to exit floor price regime today

Restrictions on last two stocks under floor price regime may end as BSEC signals broader market reforms and greater exchange autonomy

The floor prices imposed on the shares of Beximco Limited and Islami Bank Bangladesh PLC—the last two stocks still under trading restrictions—are likely to be withdrawn today, according to sources familiar with the matter.

The Bangladesh Securities and Exchange Commission (BSEC) communicated the policy decision during a courtesy meeting with the board of directors of the Dhaka Stock Exchange (DSE) yesterday.

Speaking to TBS after the meeting, DSE Chairman Mominul Islam said discussions focused on most of the commitments announced by the new BSEC chairman during his first press briefing.

“The commission has expressed a positive stance toward empowering the stock exchanges. Discussions covered deregulation, automation, market surveillance, IPO-related matters and several other important issues,” he said.

Mominul said the DSE assured the regulator of its full cooperation in restoring investor confidence and strengthening the capital market.

“The stock exchange is fully prepared to support market development and safeguard investors’ interests,” he added.

According to him, the commission is expected to announce its decision on the floor prices today, with the withdrawal potentially taking effect from the next trading session.

DSE Director Minhaz Mannan Emon, who attended the meeting, said the BSEC chairman informed the delegation that the floor prices on Beximco Limited and Islami Bank Bangladesh PLC would be withdrawn soon.

He said the regulator also outlined plans to make the stock exchanges more autonomous by gradually restoring powers previously held by them, including market surveillance, IPO scrutiny and other regulatory functions.

“The commission intends to reduce unnecessary intervention in the market. However, if the stock exchange fails to perform its responsibilities, BSEC will step in where necessary,” Emon said.

The meeting also addressed the long-standing negative equity problem facing brokerage houses and merchant banks. 

According to the DSE Director, the commission is considering practical measures to resolve the issue while maintaining market stability.

He added that the new chairman stressed the need to align the market with economic realities and pursue reforms that would strengthen confidence among intermediaries, institutional investors and retail investors.

Discussions also covered deregulation, including a review of rules and regulations that may be hindering efforts to rebuild investor confidence, he said.

Background of floor prices

BSEC introduced floor prices in two phases to prevent a prolonged decline in the stock market.

The first floor price mechanism was imposed on 19 March 2020 during the Covid-19 pandemic to curb excessive volatility. A second round followed on 28 July 2022 amid mounting economic pressures triggered by the Russia-Ukraine war.

The measures left many listed stocks locked at their minimum allowable prices, sharply reducing trading activity, weakening liquidity and disrupting normal price discovery.

In response to demands from market stakeholders, BSEC began phasing out floor prices from 19 January 2024. By August 2024, restrictions had been lifted from almost all listed securities, except Beximco Limited and Islami Bank Bangladesh PLC.

Market participants believe that lifting the remaining floor prices will help restore a more efficient price discovery mechanism and remove one of the last major regulatory distortions in the market.