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Bangladesh Securities and Exchange Commission (BSEC) has extended the deadline for listed stockbrokers and merchant bankers to adjust their negative equity and unrealised losses until 2030.
However, institutions seeking to avail themselves of the extended timeframe will have to maintain provisions of at least 25 per cent each year from 2027.
The securities regulator has also imposed restrictions on accounts with negative equity, including a ban on providing fresh margin loans and charging interest against such beneficiary owner (BO) accounts.
The decision was taken at the 1,038th commission meeting, chaired by BSEC Chairman Masud Khan on Tuesday, according to a press release signed by the commission’s Executive Director and spokesperson Abul Kalam.
Under the new decision, the amount of provision required will be determined based on the negative equity of the concerned institutions as of September 30, 2026.
Stockbrokers, stock dealers and merchant bankers will have to set aside provisions at a minimum annual rate of 25 per cent from 2027. Through this phased provisioning, the existing negative equity must be fully adjusted by 2030.
The BSEC said the previous decisions would remain applicable to institutions that had already received an extension for adjusting their negative equity.
The commission also made it clear that the extended deadline would apply only to negative equity existing as of September 30, 2026.
Any new negative equity created during 2026 must be adjusted within that year. Similarly, any negative equity arising after the specified date will not qualify for the extended adjustment period until 2030. The concerned institution will be required to maintain the necessary provisions in the year the negative equity is created.
The BSEC has also imposed several conditions on trading and portfolio management involving BO accounts with negative equity.
Under the new rules, proceeds from the sale of existing shares held in such accounts may be used to purchase new shares in the A category, allowing investors to reorganise their portfolios.
However, no fresh margin loan can be provided for the purchase of new shares. Transactions involving such BO accounts will also not be allowed through the block market.
During the entire period of provisioning and adjustment of negative equity, stockbrokers and merchant bankers will not be allowed to charge interest on margin loans or impose portfolio management fees on the affected accounts.
The commission further said investors would not be held liable for any claims or obligations arising from these accounts, nor could any additional financial burden be imposed on them in connection with such liabilities.
The BSEC has also prohibited the concerned stockbrokers, stock dealers and merchant bankers from declaring or distributing cash dividends during the extended adjustment period.
According to the commission, the measures will allow market intermediaries to gradually address their existing negative equity and unrealised losses while maintaining greater discipline in the capital market.
The regulator said the decision was also aimed at protecting investors’ interests, ensuring market discipline and contributing to greater stability and confidence in the country’s capital market.
By setting a phased provisioning requirement while restricting fresh margin lending to loss-making accounts, the BSEC appears to be seeking a balance between giving affected institutions time to recover and preventing the accumulation of further financial risks in the market.