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Bangladesh

Bangladesh: New rule imposes floor price on all securities

  • Bangladesh Securities and Exchange Commission's new rule sets the floor price as the VWAP of the last five trading days

  • However, the regulator has decided to keep the upper limit of the circuit breaker unchanged

  • Security prices will not decrease from a certain level after a few trading sessions

Bangladesh: New rule imposes floor price on all securities
IDLC Securities
19 March 2020
Published byIDLC Securities

The Bangladesh Securities and Exchange Commission has introduced a new rule for setting the floor prices of securities and issued a circular on 19 March 2020 in this regard. 

The opening price of any listed security will be the VWAP of the last five trading days. This price will be considered as the floor price of each security. However, the regulator has decided to keep the upper limit of the circuit breaker unchanged. 

If this circular prevails, security prices will not decrease from a certain level after a few trading sessions. Our simulation, for example, suggests that the prices of BRAC, GP and SQURPHARMA cannot decrease from the BDT30, BDT220 and BDT160 level, respectively. 

Table 1: Price limit 
Price limitUpper circuit on yesterday's closing priceLower circuit/opening price

Up to BDT200

10.00%

VWAP of last 5 Days

Above BDT200 to BDT500

8.75%

VWAP of last 5 Days

Above BDT500 to BDT1,000

7.50%

VWAP of last 5 Days

Above BDT1,000 to BDT2,000

6.25%

VWAP of last 5 Days

Above BDT2,000 to BDT5,000

5.00%

VWAP of last 5 Days

Above BDT5000

3.70%

VWAP of last 5 Days

Source:  BSEC Circular 

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