Written by The Banking Post
A high-powered committee under the finance ministry has proposed introducing a new ‘R’ category to segregate chronically weak stocks and curb price manipulation in the equity market.
The proposal recommends shifting long-closed, loss-making and non-dividend-paying companies from the main trading board of the stock exchanges to a separate platform, where their shares would be labelled under the new ‘R’ category. The move is aimed at checking abnormal price spikes and speculative trading in fundamentally weak stocks, according to officials familiar with the matter at the Ministry of Finance and the Bangladesh Securities and Exchange Commission (BSEC).
The four-member committee, led by Anisuzzaman Chowdhury, special assistant to the chief adviser, submitted its report in November last year. Chowdhury said transferring failing companies to a separate trading platform would help restore market discipline and rebuild investor confidence. “People lost their money on bad companies, so we think this may help,” he said.
Under the proposal, trading in ‘R’ category shares would face tighter controls. Shares bought in this segment could not be sold for at least one month, while the settlement cycle would be extended to seven days. The committee urged the Financial Institutions Division, the BSEC, and the Dhaka and Chittagong stock exchanges to implement the measures quickly.
Alongside the new category, the committee also proposed setting up a Tk 100 billion special fund to support market liquidity and provide low-interest loans to small investors.
Data from the Dhaka Stock Exchange show that out of 397 listed companies, 205 are currently in the ‘A’ category, 82 in ‘B’, and 110 in the ‘Z’ category. The committee noted that many ‘Z’ category firms have remained closed for years, yet their share prices are periodically pushed up through manipulation.
At least 32 listed companies have been out of production for an extended period, the report said, stressing the need for a structured exit plan for such firms. If implemented, the proposed ‘R’ category is expected to reduce distortions in the main market and bring greater stability to the equity trading system.
