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Bangladesh

Bangladesh: Regulator changes lower limit of the circuit breaker from 2% to 5%

  • BSEC declared that the lower limit circuit breaker of all stocks to be changed from 2% to 5%

  • Improving the liquidity in the market could be a purpose of changing the lower limit

  • The upper limit of the circuit breaker remains unchanged

Tanay Kumar Roy
Tanay Kumar Roy

Research Analyst

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Shopnil Paul
Shopnil Paul

Research Associate

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IDLC Securities
21 April 2022
Published byIDLC Securities

The stock market regulator, The Bangladesh Securities and Exchange Commission, declared that the lower limit circuit breaker of all stocks is to be changed from 2% to 5%. The new lower circuit breaker is applicable from 21st April 2022 (today). The upper limit of the circuit breaker remains unchanged.

Please note that the regulator first changed the lower limit of the circuit breaker for all stocks on the 9th March 2022. The change was enacted because the broad index dropped from 7,080 level to 6,400 level and hence the regulator aimed at stabilizing the sentiment of the investors who might trigger panic sell amid continuous downtrend of the market. The first change in lower limit of circuit breaker resulted in a temporary recovery to 6,770 level.

There are two reasons why the regulator increased the lower limit to 5%.

  • First, the regulator mentioned that the first change of lower limit to 2% would be temporary.

  • Second, average daily market turnover declined from BDT 9bn+ to below BDT 5bn. Hence, another purpose of the recent change in lower limit could be to increase liquidity in the market.