BSEC extends negative equity adjustment deadline for brokers, merchant banks to 2030

The Bangladesh Securities and Exchange Commission (BSEC) has extended the deadline for stockbrokers and merchant banks to adjust their existing negative equity and unrealised losses until 2030, giving the affected institutions more time to clear their accumulated deficits.

The decision was taken at the commission’s meeting, held on Tuesday (10 November).

According to the press release, under the new arrangement, the institutions concerned must make provisions against their existing negative equity, calculated as of 30 September 2026, at a minimum rate of 25% annually from 2027. They will have to fully adjust the existing negative equity by 2030.

However, any fresh negative equity created during 2026 beyond the amount recorded on 30 September must be fully provisioned for or adjusted within the same year. Such new losses cannot be included in the phased provisioning arrangement.

The commission also imposed several conditions to protect investors during the extended adjustment period. Investors with negative-equity beneficiary owner (BO) accounts will be allowed to rebalance their portfolios by selling existing shares and purchasing A-category shares.

However, brokers and merchant banks will not be allowed to provide fresh margin loans for such purchases, and transactions in these accounts cannot be conducted through the block market.

Stockbrokers and merchant banks will also be prohibited from charging interest on margin loans or portfolio management fees on the affected BO accounts during the provisioning and adjustment period.

The BSEC further said investors cannot be held responsible or burdened with any financial liabilities arising from claims or obligations associated with negative-equity accounts.

As another condition, the affected stockbrokers, stock dealers and merchant banks will not be allowed to declare or distribute cash dividends during the extended adjustment period.

The commission said the extension would enable the concerned institutions to gradually address their existing negative equity and unrealised losses while safeguarding investors’ interests. It expects the measures to help maintain discipline in the capital market, support stability and strengthen investor confidence.

The BSEC clarified that institutions whose adjustment deadlines had already been extended will continue under their existing arrangements.