In keeping with the Budget 2011 proposals, the Colombo Stock Exchange yesterday announced that the share transaction levy would be increased from 0.2 percent to 0.3 percent with effect from January 1, 2011. The Securities and Exchange Commission said that from January 1, 2011 brokers would have five days before force selling shares to recover dues from investors who had purchased shares on credit, but existing portfolios have been given time until June 30, 2011 to clear their accounts, the Director General of the Securities and Exchange Commission said.The government opted to increase this levy in the absence of a capital gains tax.
The stock exchange announced the following revisions to transaction costs following the revision to the share transaction levy.
As reported in The Island Financial Review yesterday (30) the Securities and Exchange Commission (SEC) has allowed brokers to extend credit through margin providers and provide a grace period of three days plus the transaction date (T+3) after which brokers have two days to force sell stocks to recover dues.
"With effect from January 1, 2011, all broker firms shall be required to force-sell by T+5, securities of buyers who are in default of settlement by T+3 days, in order to recover the monies owing to them by such defaulting clients," the SEC said yesterday (30).
An official of the Securities and Exchange Commission (SEC) said this would apply to transactions from January 3, 2011. Existing portfolios have been given until June 30, 2011 to clear accounts acquired through margin trading or credit from brokers.
SEC Director General Malik Cader told The Island Financial Review that brokers would have to reduce their credit portfolios by 50 percent by end March 2011, and clear all credit accounts by end June.
"There is no need to panic as existing credit accounts have been given time. The T+5 rule would apply to transactions that take place from January 3," he said.
source - www.island.lk
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