INNOVISION

THE BEST OR NOTHING

 20002
MD. HASAN
SHARIAR
 What Is Margin
Trading

BORROWING MONEY FROM BROKER TO BUY

STOCK
Example

Marginal outcome If the Stock Price

goes up
The Conclusion is –
Margin can escalate your
profit on the up side but
magnify your loss on the
down side
Margin Account & initial
Margin
Guidelines for margin trading- Margin can
backfire
▶ Buy stock of large companies that have relatively stable price
▶ Constantly monitor the stock price
▶ Have a payback plan for your margin debt
 8

Capitalist Slides
 20018
MD. AL AMIN
RASHID
 Some terms
• debit balance means loan amount
• exchange means recognized stock exchange
• member means registered stock broker
• equity means the sum of margin and current
market value of securities bought or carried in a
client’s account
 Margin Account
• Agreement between client and member
• Authorization of rights to member
• Restriction to subscribe new share
 Initial Margin
• Amount of margin
• Time of depositing money
• Procedure when margin is below minimum level
 Procedures
• member will send notice to client
• client will have to bring additional margin in the margin
account to keep it in the previous level
• client will have to bring additional margin within three days
from the date of notice
• until then member will not permit any new transaction in the
account
 Minimum Margin
• It must be 125% of debit balance. member has
right to liquidate margin account including
marginable securities to bring it 150% of debit
balance
 Others
• review of account by member
• substantial additional margin
• change in margin requirements
• Withdrawal from account
 Forms of deposits
• cash
• Government securities
• Marginable securities
• Such others as prescribe by the commission from
time to time
 Discretionary account
• Clients may give rights to member to transact
securities on behalf of him
• Client has to provide written agreement for
opening account and
• Agreement must be accepted by the member
 20023
MD. SOHAG
HOSSEN
 DSE LAUNCHES
SHARIAH INDEX
Dhaka stock exchange (DSE) launched shariah
index, which will represent share price
movements of the listed companies based on
islamic shariah. The index is constructed as a
subset of the DSE broad index (DSEX) and
includes all stocks included in the parent index
that pass rules-based screens for shariah
compliance", 
 FREQUENTLY ASKED QUESTION
Shariah indices provides with a
comprehensive set of shariah
compliant investment solutions.
Representative of each market, with
high correlation to their underlying
indices, each index offers a comparable
investable portfolio while adopting
explicit, transparent selection criteria
as defined by Islamic law
 Eligibility criteria
Business activities related to the following
excluded:
1.Advertising and media with the
following exception
➢ Media and advertising companies

generating revenues in excess of 65% of

total income from the GCC countries
➢ New channels

➢ Newspapers

➢ Sports channels
 Eligibility criteria conti….
2.Alcohol
3.Cloning
4.Financial, excepts
➢ Islamic banks
➢ Islamic financial institutes
➢ Islamic Insurance Companies

5.Gambling
6.Pork
7.Pornography
8.Tobacco
9.Trading of gold and silver as cash on differed
basis
 20001
MD. RAIHAN
SOBHAN
 Dhaka Stock Exchange

Indices

DS 30 Index DSEX Index

As per As per
DSE Bangladesh Index
Methodology

Designed & Developed by

S&P Dow Jones Indices

in

2013
 Criteria In constructing indices

•Float-adjusted Market Capitalization

•DS30
•Above 500 million BDT
•DSEX
•Above 100 million BDT

•Liquidity
•DS30
•A minimum three-month ADVT of 5 million BDT
•DSEX
•A minimum six-month ADVT of 1 million BDT
 Criteria In constructing indices

•Financial Viability
•DS30
•Stocks must be profitable as measured by positive net income over the latest 12 months
•DSEX
•Not Needed

•Sector Classification
•DS30
•Classified according to the DSE Industry Classification System
•DSEX
•Sector Diversification is not applied
Market Capitalization

Market Cap= Stock Price × No. of Shares Outstanding

Float-adjusted Market Capitalization

FFM = Share Price x (Number of Shares Issued – Locked-In Shares)

Capitalization-weighted Index

A type of market index where individual components are weighted

according to their total market capitalization.
 The 2010-11 Tragedy
2009
➢ Share market started to turn bullish because of-
1. End of two-year political crisis
2. Entrance of GP
2010
➢ DSEGEN increased from 4568.40 points in January to 8918 points in
December.
➢Later in December the capital market experienced an immense fall due to
the conservative monetary policy of BB.
2011
➢ The index decreased by 21% within January, with masterminds of crash
making about BDT 50 Billion
➢ The market stood at 5500 index points causing 3.5 million people loosing
their money.
 Reasons Behind the Crash

➢ Increase of B/O Account

➢ Poor Regulation
➢ Uniform Face Value of Shares
➢ Misuse of Omnibus Accounts
 20025
MD. SHAFIQUL
ISLAM SHUVO
 EXAMPLE OF MARGIN 31

FROM AN INVESTORS PERSPECTIVE

Suppose an investor, purchases 1000 shares of GP at TK. 100/- on January 1,

2017. Investor has to give the purchase amount of TK. 1,00,000/- (1000 x 100)
to his broker on or before January 2, 2017. Broker, in turn, has to give this
money to stock exchange on January 3, 2017.

There is always a small chance that the investor may not be able to bring the
required money by required date. As an advance for buying the shares, investor
is required to pay a portion of the total amount of TK.1,00,000/- to the broker at
the time of placing the buy order. Stock exchange in turn collects similar amount
from the broker upon execution of the order. This initial token payment is called
margin.

Capitalist Slides
 EXAMPLE OF MARGIN 32

Capitalist Slides
 EXAMPLE OF MARGIN 33

A margin call requires the investor to add new cash or securities

to the margin account. If the investor does not act, the broker
may sell securities from the account to pay off enough of the
loan to restore the percentage margin to an acceptable level.

Capitalist Slides
 MARGIN AND VOLATILY IN BANGLADESH 34

Capitalist Slides
 MARGIN AND VOLATILY IN BANGLADESH 35

Capitalist Slides
 EXAMPLE OF CONSTUCTING INDEX 36

FROM AN INVESTORS PERSPECTIVE

Lets say we are provided with the following information regarding three
companies currently trading in Dhaka Stock Exchange:

Price
Stock Number of shares
Beginning Ending
GP 1,000,000 60 80
BATBC 10,000,000 20 35
BEXIMCO 30,000,000 18 25

So how we can construct the DSEX index based on the above information?

Capitalist Slides
 EXAMPLE OF CONSTUCTING INDEX 37

Amounts in TK.
Stock Number of shares
Beginning Market Ending Market
Price Value Price Value

GP 1,000,000 60 60,000,000 80 80,000,000

BATBC 10,000,000 20 200,000,000 35 350,000,000
BEXIMCO 30,000,000 18 540,000,000 25 750,000,000
Total 800,000,000 1180,000,000

Capitalist Slides