The Securities and Exchange Commission (SEC) Wednesday extended margin loan adjustment period to October 15 under the new criteria set for the stockbrokers and merchant bankers, officials said.
On Tuesday, the SEC asked the stockbrokers and merchant banks to follow a net asset value (NAV) calculation for determining new margin loan at ratio of 1:1.
"The investors whose loan exposure exceeds the new ratio should have been reported by September 30, but this period has been extended upto October 15," sources said in the SEC.
The securities regulator will sit with the merchant bankers and stock exchanges on Sunday about implementing method of the new loan margin guideline.
Under the new guideline, for example, if an investor buys 100 shares at market price of Tk 1,000 each totalling Tk 1,00,000 and the company's NAV per share is Tk 500, the value for a margin-loan will be Tk 750 [(Tk 1,000 + Tk 500)/2]. The investor can then buy another 75 shares of a company following the margin rule.
The merchant bankers, however, said the NAV-based computing is complex and hard to implement.
"It is not easy to calculate the daily margin loan of an investor. Without proper software, NAV-based calculation cannot be applied effectively," said a merchant banker.
* The Financial Express, August 26 2010
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