The High Court has suspended the much-discussed ‘Margin Rules 2025’ for the capital market. On Sunday (17 November), Annex Court No. 34 issued an urgent injunction, halting the implementation of the new rules and ordering an immediate suspension of all force-sell activities.

The court noted that the rules, if enforced, could severely impact a large number of investors. Therefore, the new margin rules cannot be implemented until further notice.

Key Provisions of the Proposed BSEC Margin Rules:

1. Margin Eligibility Restrictions

Margin financing would be allowed only for shares in the ‘A’ and ‘B’ categories listed on the main board of the stock exchange.

If a ‘B’ category company fails to declare at least 5% dividend annually, margin financing for that stock would be prohibited.

If any ‘A’ or ‘B’ category stock is later downgraded to ‘Z’ category, investors must be notified and required to sell and adjust the position within 60 trading days.

2. No Margin on SME, ATB, or OTC Platforms

No margin financing would be allowed for securities listed on the SME, ATB, or OTC platforms.

3. Adjustment of Existing Margin Accounts

If any security held in existing margin accounts becomes non-marginable due to the new rules, it must be sold and adjusted within six months of the rules taking effect.

4. Strict Restrictions to Prevent Conflict of Interest

No margin financing would be allowed for securities issued by the margin lender or its sponsor/directors.

Margin cannot be used to participate in any public offering or rights issue.

Directors of a listed company cannot use margin financing to buy shares of their own company.

Locked, pledged, encumbered, or director-held shares cannot be deposited as margin collateral under any circumstances.

Market insiders believe the High Court’s decision will ease stress in the capital market, while investors expect the suspension of force-sell activities to help reduce unnecessary selling pressure.