• Monday, Aug 08, 2022
  • Last Update : 04:24 pm

Circuit breaker for 66 companies lowered to 2%

  • Published at 07:25 pm April 10th, 2021
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As a result, share prices of the companies can increase maximum 10%, but can reduce only 2% every trading day

The Bangladesh Securities and Exchange Commission (BSEC) on Saturday set the lowest price change limit at 2% for 66 companies, whose floor price bar was withdrawn recently.

Previously, the lowest circuit breaker of the 66 companies was around 10%.

This means, share prices of the companies can increase maximum 10%, but can reduce only 2% every trading day.

A circuit breaker is an emergency-use regulatory measure to halt trading temporarily on an exchange. Circuit breakers are in place to try to curb in panic-selling.

BSEC issued an order regarding the matter on the day, and asked the Dhaka and Chittagong stock exchanges to execute the order from Sunday.

According to the order, "The commission directs Dhaka and Chittagong stock exchanges to impose a standard downward price change limit (circuit breaker) of 2% based on reference price or previous day’s trading price to the list of 66 companies."

However, the upper limit of the circuit breaker will remain unchanged at 10%, the order also said.

Earlier on April 7, the commission withdrew the floor prices of shares of 66 listed companies.

Following the decision, Share prices of 61 companies declined while 40 companies of the 66 companies hit the lower circuit on April 8.

The core index of Dhaka Stock Exchange, DSEX, lost 82 points on April 8 due mainly to the floor price withdrawal decision.

Therefore, BSEC reduced the downward price change limit of the 66 companies to check downfall in the market.

On February 15 earlier this year, the BSEC had decided to reset the floor price for bonus or rights share issuing companies at an adjusted price in the aftermath of their corporate declaration.

BSEC made the move to revise the floor price after the British American Tobacco Company Bangladesh (BATBC) declared a 200% stock dividend for its shareholders and its then floor price was Tk907 a share.

Earlier on March 19 last year, the BSEC launched a new circuit breaker to halt the free fall that yielded positive outcome in the indexes.