The Financial Express

Govt may extend IPO quota facility for small investors

| Updated: June 17, 2018 17:17:50

Govt may extend IPO quota facility for small investors

The securities regulator has taken an initiative to extend the IPO quota facility for the small investors, who were affected by the capital market debacle in 2010-11.

The small investors are enjoying 20 per cent quota in the initial public offerings (IPOs) since introduction of the facility in March, 2012.

It has so far been extended for six times since the inception and the latest one expires this month (June 30).

Bangladesh Securities and Exchange Commission (BSEC) has proposed the finance ministry to allow it for one more year to June 30 next year, said an official source.

The finance ministry is yet to finalise its decision in this regard, a joint secretary of the Financial Institutions Division told the FE.

Generally, the IPO shares are traded comparatively at higher prices on the secondary market than their issue prices due to unusual attraction of a section of investors to that scrip in first few trading sessions.

The quota facility allows the affected investors to make some profit.

"We have already sent a letter to the finance ministry to allow continuing with the facility for one more year to June 30, 2019," an official at the BSEC said.

The government had announced a special package for the capital market investors, including 20 per cent quota facility in IPOs for fiscal year 2012-13, for the small investors to help them mitigate the losses due to the debacle.

The BSEC had also declared a stimulus package for short, medium and long terms.

The central bank also provided Investment Corporation of Bangladesh (ICB) with a fund of Tk 9.0 billion in three equal instalments to help mitigate the sufferings of the affected investors.

The government recently reduced the interest rate on loans to 6.0 per cent from 7.5 per cent under the refinancing scheme.

At least 960,000 investors were affected by the debacle, according to a BSEC report on the 2010-11 market crash.

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