Dhaka, Bangladesh (BBN)– Most merchant banks and brokerage houses are still facing ‘acute’ fund crisis, affecting the share buying power of both general and institutional investors, market operators said.

Although the Securities and Exchange Commission (SEC) recently raised the margin loan ratio to 1:1.5 from 1:1 following the steepest ever fall in the country’s stock market, most brokerage firms and merchant banks are still providing loan at a much lower ratio than the enhanced one.

A section of investors, however, blamed brokerage houses and merchant banks for creating `artificial crisis’ in the capital market on the plea of fund shortage.

Yaweer Saeed, a leading mutual fund manager, told the Financial Express (FE), a local newspaper, that fund crisis among financial institutions is not unlikely in December as they make payments for various purposes by the year-end. “They are also very careful about any investment decision by the year-end,” he said, adding that the present sluggishness is the outcome of recent volatility in the money market.

“Financial institutions had overexposed them to the capital market recently. They are adjusting now after getting various directives from the regulator,” he noted.

After reaching all-time high turnover of BDT 32.50 billion in the country’s premier bourse – Dhaka Stock Exchange (DSE) – on December 5, the turnover slumped to BDT 14.13 billion Monday. The last week’s turnover average was BDT 15.19 billion in DSE.

BBN/SI/AD-28Dec10-1:31 am (BST)