Apex court okays SEC’s direction on share credit

The Supreme Court on October 10 stayed a High Court order that earlier halted a Securities and Exchange Commission’s (SEC) decision directing the merchant banks and stockbrokers to follow a net asset value (NAV) based calculation for credit disbursement and loan maintenance.
Following the SC order, merchant banks and stockbrokers will have to follow the NAV calculation in providing and maintaining margin loans.


A three-member bench of the Appellate Division, headed by Chief Justice ABM Khairul Haque, passed the order following a stay petition filed by the stockmarket regulator.


The HC on September 27 stayed the SEC’s directive on share credit and 'trigger sale' for three months.


The SEC in the directive instructed the merchant bankers and stockbroker to consider diluted earnings per share (EPS) on income from continuing core operations to calculate the price earnings (PE) ratio to disburse share credit. If diluted EPS is not available, basic EPS can be considered, it said.

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