Bangladesh Securities and Exchange Commission (BSEC) Chairman Masud Khan has urged investors not to panic over the proposed introduction of the Price-to-Book (P/B) Ratio in the draft amendment to the BSEC (Margin) Rules, 2025, saying the proposal is still under review and no final decision has been made.

Speaking to Dhaka Post, Masud Khan said investors should not be alarmed by the proposed changes, as the draft has been circulated only to gather opinions from stakeholders.

“When people encounter a new concept, they often become uncertain because they are unfamiliar with it. The P/E ratio has long been in use, but the P/B ratio is also an internationally accepted practice,” he said.

The BSEC chairman emphasized that the commission will carefully review feedback before finalizing the regulation. “Once the consultation process is complete, the final rules will reflect our ultimate decision,” he added.

Under the draft amendment, BSEC has proposed replacing the Price-to-Earnings (P/E) Ratio with the Price-to-Book (P/B) Ratio for determining margin loan eligibility for banks, financial institutions, and insurance companies.

According to the proposal, margin financing would not be allowed for banks and financial institutions with a P/B ratio above 3, while insurance companies with a P/B ratio exceeding 1 would be excluded from margin financing.

The proposal has triggered concern in the stock market, particularly in the insurance sector. Market participants fear that more than 50 of the country’s 58 listed insurance companies could become ineligible for margin loans under the proposed criteria, contributing to a sharp decline in insurance share prices.

Since the draft amendment was approved by the BSEC Commission on July 14, the market has seen increased volatility. During the week of July 19-23, the DSEX benchmark index fell 96 points to 5,804, with insurance stocks accounting for much of the decline. Of the 58 listed insurers, share prices of 54 companies dropped during the week.

Acknowledging the market reaction, Masud Khan said the commission would review the proposal if it is found to be causing confusion or unintended consequences.

“If the market is unable to understand the proposal and it creates a significant negative impact, we will certainly review it. We are a market-friendly commission and will not impose anything on investors. Any reasonable objections raised by stakeholders will also be considered,” he said.