DSE raises Islami Commercial Insurance’s share price by 20% at debut
Due to the complexity of the company’s trading code, the Dhaka bourse deferred the debut, while the CSE went ahead as planned on Wednesday last week
The Dhaka Stock Exchange (DSE), which failed to make the trading debut of the Islami Commercial Insurance as per schedule due to technical glitches, increased the prices of the shares by 20% on Sunday to balance them with those of the Chittagong Stock Exchange (CSE).
Due to the complexity of the company's trading code, the Dhaka bourse deferred the debut, while the CSE went ahead as planned on Wednesday last week.
The share prices went up by 20% to Tk12.10 each in two days' of trading on the CSE.
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After the technical issues were resolved, the Dhaka bourse began trading shares at Tk12.10, using it as a reference price to avoid a price difference between the two stock exchanges.
At the same time, the share price went up by about 10% and ended at Tk13.30 each on the first session. That is, the share price saw a 30% increase on the first day on the DSE.
According to the circuit breaker guidelines of the Bangladesh Securities and Exchange Commission (BSEC), the share price of a new company can increase by a maximum of 10% on the day it starts trading.
DSE officials said that although there is no legal provision to increase the share price in this way, the decision has been taken to balance the share price of the company on the two stock exchanges.
Because, one can buy shares at a low price in the DSE and sell shares at a high price in the CSE.
M Shaifur Rahman Mazumdar, acting managing director of the DSE, told The Business Standard, "The decision has been made based on the given reality."
"There is a practice of taking the stock price reference price from one stock exchange to another stock exchange when trading starts late. The same has been the case with Islami Commercial Insurance transactions, as it has been in the past," he added.
DSE officials said this was also the case with Nialco Alloys, which started trading on the SME platform. Initially, the company's shares were traded on the CSE.
Later, trading on the DSE began, with the previous day's close price on the CSE serving as the reference price.
Earlier, this happened in the case of JMI Syringes and Medical Devices Ltd. However, at that time, with the approval of the regulatory body, trading started by taking the previous day's closing price as the reference price on the CSE.
Islami Commercial Insurance Company is a non-life insurer in the country that started doing business in 2000.
On 15 September, the BSEC approved Islami Commercial Insurance's initial public offering (IPO) to raise Tk20.26 crore from the stock market.
The non-life insurer has issued shares at a face value of Tk10 each.
According to the prospectus, the company will use the raised funds to invest in government and listed securities and fixed deposits.
