Pragati Life Insurance stock traded at different prices in Dhaka and Ctg stock exchanges

The stock of Pragati Life Insurance was traded at different prices in two different stock exchange today -- at Tk 113.7 on the Dhaka Stock Exchange trading board and at Tk 97.3 in the Chattogram Stock Exchange.

The stocks were traded at higher prices on the DSE board as they were not reduced by the DSE even after issuance of right shares.

When a company issues new shares either through bonus shares or right shares the stock prices are supposed to be adjusted in accordance with the availability of higher number of shares.

The port city exchange adjusted the price on the basis of floor prices.

The stock market regulator set floor prices for all stocks in March to stop freefall of stock prices during the Covid-19 pandemic.

A floor price is a government- or group-imposed price control or limit on how low prices can go for a product or service.

However, DSE did not adjust the share price of Pragati Life Insurance, which issued one 'right share' to each shareholder.

The category-A life insurance company got approval from the Bangladesh Securities and Exchange Commission (BSEC) to raise Tk 23 crore by issuing right shares at a premium of Tk 5.

As the share price is not allowed to go below the floor price, the DSE did not adjust the price, said a top official of the DSE, who preferred not to be named.

Pragati Life's floor price was Tk 88.3 whereas its adjusted price should have been Tk 70.65. The company's closing price before the record date was Tk 126.3.

DSE's Managing Director Sanaul Hoq could not be reached over phone for comment.

"How has the DSE allowed trading of the stock at the previous price?" asked a top official of the BSEC, preferring anonymity.

He said they were going to ask the bourse about the issue, adding that it was a total mess because many investors have already been affected.