The Securities and Exchange Commission yesterday reset the margin loan criteria in an effort to cool down the market, now riding high on a liquidity glut.

In line with the modified criteria, investors will no longer get credit against equity securities with a PE (price-earnings) ratio over 50.

A PE ratio is a company's current share price compared to its earnings per share. In general, a high PE ratio reflects that investors expect higher earnings in future or a strong chance that they will be able to make a capital gain.

In other words, share value will increase and the investor is free to sell at a rate higher than he paid for

A marginable security is a stock that can be purchased on margin loans provided by brokerage houses and merchant banks.

On December 9 last year, SEC made a similar decision, disallowing investors to get credit against equity securities having a PE ratio over 75.

In line with another decision yesterday, SEC has limited brokerage houses' margin loans to a 1:1.5 ratio, which means investors with Tk 100 capital will be eligible for a maximum of Tk 150 loans. The ratio was as high as 1:2.

Surging bank shares drove the Dhaka Stock Exchange general price index over the 5,400-point mark yesterday. A market update showed bank issues were the driving force for the surge.

All the three indices went up with DGEN increasing by 1.56 percent and DSI by 1.53 percent. Total turnover keeps on making records.

Grameenphone was another driver. The telecom sector gained 4.68 percent as GP closed atTk 279.40 compared toTk 266.90 a day earlier.

The market turned around and started increasing right from the start. Within the first 30 minutes it increased by 60 points from 5,365 points before decreasing a bit. Remaining at that level for some more time, the benchmark index started moving up through small ups and downs to close at 5,451.15 points.