FE Report (September 28, 2010)
The High Court (HC) stayed Monday the SEC's recent directive on the NAV-based margin loan calculation and suspension of netting facilities for non-marginable securities for a period of three months.
A HC bench, comprising Justice Mamnoon Rahman and Justice Syeda Afsar Jahan, issued the stay order.
The court also asked the Securities and Exchange Commission (SEC) to explain within next four weeks as to why its directive regarding the NAV-based margin loan calculation and suspension of netting facilities would not be declared illegal.
Two investors -- Md Murshedur Rahman and Mohammad Shahnewaz Rubel -- filed a writ petition on September 26, challenging the SEC's directive. Barrister Sheikh Fazle Noor Taposh and Barrister Abul Kalam Azad were the petitioners' lawyers.
When contacted, an SEC official said decision would be taken after receiving a copy of the HC's stay order.
On September 6, the SEC issued the directive saying that the stockbrokers and merchant bankers will apply the margin call requirements based on the companies' latest available NAV, calculated by the Dhaka Stock Exchange (DSE).
The directive also said netting or adjustment facilities regarding buy or sell of non-marginable securities will remain suspended until further order. Besides, such securities will not be allowed to buy against pre-matured sell proceeds of any marginable securities.
On September 21, the SEC issued another directive, giving a clarification in calculating the amount of margin loans.
Before issuing the directive on the NAV-based margin loan calculation, the SEC sat twice with the leaders of the stock exchanges and merchant banks to discuss about its implementation.
At the meeting the merchant bankers urged the SEC to reduce the amount of margin loans instead of implementing the NAV-based margin loans calculation.
But the regulator stuck to its position and asked the lenders to offload stocks by September 30 to adjust the loans previously provided to their clients.
No comments:
Post a Comment