Desperate investors now can buy and sell listed securities at prices below the existing floor price level in the block market as part of a buyer-seller deal, bypassing the trading floor of stock exchanges.
But the price cannot go beyond the regular circuit breaker-allowed deviation from the previous session's closing price. Effectively, block market prices can be at best 10 percent lower than the existing floor price, until the floor goes away.
And, the emergency time facility will only be available to general shareholders. No director of a listed company will avail the opportunity.
Based on an application of the Dhaka Stock Exchange (DSE), the Bangladesh Securities and Exchange Commission (BSEC) on Wednesday allowed both the bourses to operate accordingly.
Currently, the stock exchanges do not allow any block transaction valued at less than Tk5 lakh to ensure its bulk character.
On top of the long-lasting bearish trend, the stock market in Bangladesh faced a free-fall in the beginning of March last. The unusual fall has put thousands of investors – both individual and institutional – at risk of collapse, mainly because of leverage, and that could have been a permanent damage for the market itself unless the regulator put its unconventional floor in the third week of March.
Because of the 66-day general holiday in the country, the stock market was closed since last week of March and reopened on May 31.
After such a long break, many investors, especially some foreign funds faced difficulties selling their shares for cash. Because, the majority of scrips do not see any spontaneous buyer at the floor price.
The move to allow block transactions below the floor will give the large account holders a breathing space if they have the intention to buy and sell.
Problems still there
GlaxoSmithKline (GSK) Bangladesh Ltd, a listed subsidiary of the United-Kingdom based drugs multinational GSK, is waiting for its majority ownership transfer deal, which is expected soon.
GSK headquarters in late 2018 entered into a contract with another European multinational Unilever to sell its health food drinks business worldwide.
Following the global deal, the two groups in India have recently amalgamated their companies concerned.
But in Bangladesh, they preferred a mother company of Unilever to buy out majority shares of GSK Bangladesh from GSK headquarters.
The deal value was agreed at around Tk1,600 per share, based on the then average market price and valuation.
But now, when the two companies are approaching for the share transfer transaction to take place sooner, the stock price of GSK Bangladesh has already gone up above Tk2,000.
The question on investors' minds is how the two groups can execute their deal in the current context, where the two non-resident parties need an opportunity for more than 20 percent deviation from the existing floor price to complete the deal at agreed price.
They might need to wait until the situation comes back to normalcy or apply to the regulator for a special consideration, suggested an investment banker while talking to The Business Standard.