Capital market taskforce recommends stricter rules for margin loans

The government taskforce for capital market reforms has proposed extending margin loans only to investors who have a minimum equity of Tk 10 lakh and at least six months of experience in the secondary market.

The taskforce has suggested a major overhaul of the Margin Rules, 1999, by introducing a new framework under the Equity Margin Rules, 2025.
The committee has also proposed making it mandatory for institutions providing margin loans to conduct risk profiling before approving them.

According to the proposal, investors without stable earnings—such as students, housewives, and retirees—will not be eligible unless they are classified as high-net-worth individuals.

The committee submitted its recommendations to the Bangladesh Securities and Exchange Commission (BSEC) on Sunday.

The proposed changes aim to introduce stricter eligibility criteria, improve risk management, and enhance transparency in margin trading.

The reforms are intended to stabilize the capital market and protect investors from excessive speculation.

A key component of the reform is the restructuring of eligible collateral, according to the taskforce.

The proposed framework allows margin financing against cash, listed A-category stocks, corporate bonds with a minimum BBB+ rating, and government securities.

However, securities under legal restrictions or lock-ups, highly speculative or illiquid stocks, and companies nearing insolvency will be excluded.

Additionally, power plants with limited life cycles will not qualify for margin financing during the last two years before their expiry, as per the proposals.