Bangladesh brokerages risk forced liquidations over Tk10,425 crore margin deficit

Retail investor wealth in Bangladesh is at risk of erosion if brokers are forced to liquidate non-marginable securities to meet a regulatory deadline. The Margin Rules 2025 require firms to implement risk-based capital adequacy, system integration, and the removal of non-marginable securities from loan portfolios by 30 April 2025.

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As of February 2025, total negative equity across brokerages and merchant banks reached Tk10,425 crore. This deficit comprises Tk8,005 crore in principal margin loans and Tk2,420 crore in accrued interest. A total of 146 firms, including 102 DSE brokers, 39 merchant banks, and five CSE brokers, hold loans where the value of the collateral has fallen below the outstanding balances.

Liquidity is further strained by a provisioning gap. Firms have set aside Tk2,946 crore against margin loans not recovered within a year, leaving a Tk5,058 crore deficit against the Tk8,005 crore principal.

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Brokers report a lack of skilled staff and technical capacity to adjust these portfolios without selling off large volumes of collateral. The DSE Brokers Association has requested a three-month extension to 31 July 2025 to avoid disorderly liquidations. Without this window, brokers may be forced to liquidate positions in thousands of investor accounts, triggering fire sales that would depress asset prices.

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