SEC seeks freeze of court order
The stockmarket regulator has moved to fight a legal battle in an effort to enforce a new rule for share loans.
The Securities and Exchange Commission (SEC) now seeks a freeze on a stay order by the High Court on its directive on a NAV calculation for share credit and trigger sale.
The NAV-based calculation was meant to control the liquidity flow to the stockmarket.
Attorney General Mahbubey Alam agreed to take up the issue in court on behalf of the SEC, an official of the commission said.
The official said all documents are ready and it is expected that the attorney general will put up the issue with the chamber judge today.
The HC on Monday stayed the SEC's directive on share credit and trigger sale for three months.
The stay order means merchant banks and stockbrokers will not have to follow the net asset value-based calculation in providing and maintaining margin loans until the court issues an order.
An HC bench also issued a rule upon the government and the SEC to explain within four weeks why they should not be directed to take steps to create an investment-friendly environment to keep the stockmarket stable. The rule also required the government and the regulator to explain why the SEC directives will not be declared illegal.
The bench of Justices Mamnoon Rahman and Syeda Afsar Jahan passed the order and the rule following a writ petition filed jointly by two investors Morshadur Rahman and Shahnewaj Jewel.
Barrister Sheikh Fazle Noor Taposh and Barrister Abul Kalam Azad appeared for the petitioners.
Recently, the SEC directed the merchant banks and stockbrokers to follow a NAV-based calculation for credit disbursement and loan maintenance.
As per the directive, Dhaka Stock Exchange will calculate margin maintenance figure based on the NAV of listed securities in line with the last available financial statements and closing prices of the last trading day of the week. The bourse will then disclose the margin maintenance figure on the DSE website at the end of each week.
For mutual funds, the DSE will calculate margin maintenance figures based on the latest disclosed NAV at market price of the mutual funds and the closing price of the relevant fund at the end of the week.
For adjustment of the existing loans, the SEC also set September 30 as deadline, meaning the investors have to either sell off their holdings to adjust the margin loans, or have to put up more cash as collateral, which are known in the market as "trigger sale" or "margin call".
Stocks, however, gained more than 100 points in early trading hours yesterday, but the market lost almost all the points later, as speculation on a move by the SEC following the HC's stay order gripped the market.
Besides, the SEC's intervention also depressed the market. The SEC asked the DSE to furnish a list of top ten clients of stockbrokers.
At the end of the day, the benchmark index of the premier bourse -- DSE General Index -- closed up 16 points, or 0.22 percent, to 7,042. It is also the highest ever level for the index.
The key index of Chittagong Stock Exchange, CSE Selective Categories Index, rose 18 points, or 0.13 percent, to 13,250.
Losers beat advancers on both bourses -- 148 to 98 with five securities remaining unchanged on the DSE and 108 to 83 with seven remaining unchanged on the CSE.
The DSE traded more than 10.61 crore shares and mutual fund units on a value of Tk 2,471 crore, while the CSE traded more than 1.15 crore shares and mutual fund units on a turnover of Tk 193 crore.