The Bangladesh Securities and Exchange Commission (BSEC) has responded to the ongoing downturn in the stock market by extending a lifeline to stockbrokers and merchant banks struggling to meet provisioning requirements. According to the announcement made on March 28, stockbrokers and merchant banks have been granted an extension until January 31, 2025, to ensure provisioning against unrealized losses in their portfolio of margin loans provided to clients.
This decision comes in light of industry requests to alleviate pressure for in-time compliance, which could exacerbate forced selling in the already troubled stock market. Under the provision, brokers and merchant banks offering loans to clients for purchasing additional stocks must set aside provisions from their income to cover unrealized losses, especially in declining markets. However, losses in the margin loan portfolio, if already realized through share sales, will require timely provisioning.
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