The securities regulator on Tuesday reduced the lower limit of the stock exchanges' circuit-breaker to 2.0 per cent from the existing 10 per cent to stop the market’s freefall.
The Bangladesh Securities and Exchange Commission (BSEC) said it decided to regulate share price movement at lower end to contain the market's downward trend.
The regulatory move came against the backdrop of losing 492.16 points by the Dhaka Stock Exchange (DSE) broad index since the Ukraine-Russia began on February 24.
Following the continuous price correction, the broad index also saw the highest single-day fall of 182 points on Monday.
"The BSEC hereby directs the Dhaka and Chittagong Stock Exchanges on temporary basis to impose standard downward price change limit of 2.0 per cent based on the previous trading day's closing price," said the BSEC order - issued on Tuesday.
The upper limit of the circuit breaker and other conditions are kept unchanged.
The BSEC order said it is expedient to regulate share price movement in trading of the stock exchanges for interest of the investors and development of the securities market.
As per the existing rules, the exchanges' circuit breaker allows up to 10 per cent price movement on both upper and lower sides.
As a result, the market price of a listed security can rise up to 10 per cent and go down up to 10 per cent in a single trading session.
From now on, the market price of a listed security can decline up to 2.0 per cent instead of 10 per cent.
Meanwhile, BSEC Commissioner Dr. Shaikh Shamsuddin Ahmed, in a press briefing on Tuesday, said they have taken the decision regarding the circuit breaker by taking into account the ongoing market situation.
"The reduced limit of the circuit breaker will be withdrawn when the situation will improve," he added.
Some of the market operators said the turnover might remain stagnant following the reduction of the circuit breaker lower limit.
"Previously, the turnover remained stagnant, as the regulator introduced floor prices to contain free fall of the market amid the Covid-19 outbreak," said a senior official of a leading merchant bank.
He, however, said the reduced limit of the circuit breaker can be allowed for the time being, considering the ongoing situation.
Asked, BSEC Executive Director Mohammad Rezaul Karim said the panic-driven investors sell shares in a downtrend market.
"Those investors again purchase securities at high prices, when the market bounces back. That's why, the lower limit of the circuit breaker has been reduced to restrict the downward trend, so that the general investors are not affected," he noted.
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