The final draft of the rules will be placed in the upcoming commission meeting of the SEC for its approval, sources said.

The merchant banking wings of financial organisations, or merchant banks, offer loans, also known as margin loans, to investors to buy securities against shares held by them.

Now, there is no guideline on offering margin loans and the merchant banks follow their internal code of conduct to approve loans to investors.

As per the draft rules, the merchant banks will face limitations to offer margin loans to investors. According to the sources, the merchant banks may be allowed to sanction 1:2 margin loans, meaning if an investor has shares worth Tk 1, he or she will be eligible to receive Tk 2 loan from the merchant banks.

When the margin rules will come into effect, the merchant banks will have to submit statements on sanctioning of margin loans every month to the market regulator.

After the SEC's consent the draft margin rules will be published in several newspapers for public opinions or suggestions. After evaluating public opinions or suggestions, the SEC will issue gazette notification.

"The objective of the rules is to bring the margin loan facility under a uniform system," Mansur Alam, member of SEC, said.

Recently, in the wake of bullish trend in stock market, the SEC advised merchant banks to play more responsible role for the sake of stable capital market following an allegation that the merchant banks were giving excess loans to the investors.

Meanwhile, price indices on the Dhaka and Chittagong stock exchanges dropped yesterday.

The DSE General Index fell by 20.58 points, or 0.88 percent, to close at 2301.35 points, while the CSE Selective Categories Index declined by 48.66 points, or 1.27 percent, to end 3770.42 points.

Besides, the DSE All Share Price Index dropped by 9.1 points, or 0.48 percent, finishing the day at 1887.87 points, while the CSE All Share Price Index decreased by 45.9106 points, or 0.8 percent, closing the day at 5633.45 points.

A total of 7,457,500 shares worth Tk 121.61 crore changed hands on the Dhaka Stock Exchange (DSE), while a total of 843,299 shares worth Tk 13.08 crore changed hands on the Chittagong Stock Exchange (CSE).

Of the issues traded on the premier bourse, 99 advanced, 91 declined and 15 remained unchanged, while of the issues traded on the port city bourse, 33 increased, 54 dropped and 10 remained unchanged.