The BSEC will withdraw the floor price mechanism soon in a bid to ensure free price movements of stocks.
Prof. Md. Mizanur Rahman, a commissioner of the securities regulator, disclosed this while joining a virtual press briefing on budget reactions of Chittagong Stock Exchange (CSE) on Wednesday.
He said the previous commission introduced floor prices for the listed securities taking into account the ongoing crisis.
"The incumbent commission is unanimous with the stakeholders about free price movements of the listed securities. We hope the floor price will be withdrawn soon…," Mr. Rahman said.
Trading on both the bourses remained dull as the majority number of sale orders placed above the 'floor prices' kept the buyers at bay since March 19 last.
As per exiting system, the market prices of the listed securities have no scope to go below individual floor prices to contain abnormal price fall.
Market insiders said under the existing system the buyers have not enough scope to purchase securities at their desired prices.
"It's also true that the P/E ratios of the most the securities are much lower following abnormal prices corrections observed before introducing the floor prices. Nevertheless, buyers do not prefer to purchase securities at the prices which remain static," a trader said.
Before setting floor prices, the country's both the bourses witnessed free fall in broad index following the outbreak of Covid-19.
Both the bourses set floor prices of listed securities on March 19 to contain abnormal price fall following a directive of the Bangladesh Securities and Exchange Commission (BSEC).
As per the BSEC directive, opening price of any listed security shall be set at the average of the closing price of immediate preceding five trading days of March 19, and this average price calculated for each security shall be considered as floor price and the lowest limit of the circuit breaker.
And the upper limit of the circuit breaker and other conditions shall remain unchanged.
As a result, the market prices of the listed securities have no scope to go below the individual floor prices set on March 19.
The BSEC, however recently relaxed the floor price limit for block market trading which only benefitted the big investors.