The listing of weak companies, looting and manipulation in the last 15 years were not reflected in the stock market index due to the floor price and circuit breaker, said the finance ministry in a press release yesterday.

With the removal of the floor price and circuit breaker, the real impact of the looting is now being reflected in the index, it said.

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), dropped 97 points, or 1.84 percent, to 5,160 yesterday.

Over the past 15 years, a number of weak and paper-based companies were listed on the stock exchanges, many of which are now a burden for the market.

Besides, some individuals looted general investors' funds by manipulating junk and poorly performing companies' stocks.

With the removal of the floor price and circuit breaker, the real impact of the looting is now being reflected in the index, the ministry said

"However, this was hidden by the artificial market mechanisms like floor price and lower circuit breaker limits," said the ministry.

In 2020, the floor price was introduced for the first time in Bangladesh's stock market to prevent stock prices from falling. It remained in effect for over a year.

It was reintroduced in 2022 and remained active until August this year, although it was partially lifted for a few days in 2023.

The BSEC also lowered the lower limit of the circuit breaker to stop companies' share prices from falling more than 3 percent in a day, even if the floor price is lifted.

The interim government has removed the floor price and the lower limit of the circuit breaker.

Justifying the removal, the finance ministry yesterday said artificial price mechanisms are not conducive to a healthy stock market.

As a result, the consequences of the previous manipulation and listing of junk companies are becoming increasingly evident, it said.

The authorities have already formed an investigation committee to look into the market manipulation that occurred in the previous years.

The government is going to reform the 2015 public issue rules to encourage good companies to go public and get a good price in initial public offerings (IPOs).

The Bangladesh Securities and Exchange Commission (BSEC) has sat with several financially sound companies and stakeholders who said the existing public issue rules do not support a good price for well-performing companies.

Therefore, the regulator is going to reform the rules to attract good companies to the market. These reforms will also support multinational companies and other well-performing companies in getting listed.

At the same time, the government has already taken steps to bring state-run companies to the stock market. After listing, these companies will have to follow good governance practices and publish financial reports regularly.

The government is hopeful that the listing of these government-owned companies will boost their paid-up capital and ensure the depth of the stock market, the press release said.