Feb 24, 2011 (LBO) - Sri Lanka securities watchdog has eased rules on volatile shares under price caps, trimming the period and also lifting a requirement for a 50 percent up front deposit prior to purchase, an official said.
"The period of the price band has been reduced to 10 days from 15," Securities and Exchange Commission chairperson Indrani Sugathadasa said.
"The requirement for a 50 percent up front deposit has also been lifted."
SEC director general Malik Cader said the rules will take effect from March 01.
The regulator brought in the rules in August 2010 after illiquid stocks in particular started to fluctuate widely.
Sugathadasa said the rules had brought stability to the market and turnover levels remained high dispelling fears that the rules will result in a market crash.
In 2010 the stock exchange had a turnover of 507 billion rupees. But till February 23, a period of less than two months, turnover was 127.7 billion rupees.
The regulator said a one-year lock-in period slapped on private placements will apply to shares allotted after February 07.
SEC said in February that investors who buy stocks in a private placement will not be allowed to sell out after a listing up to a year after the placement.
The lock in period will now be one year from February 07, when the rule was brought in.
The decision followed appeals from investors who bought shares in recent placements before the rule was introduced.
The rule will apply to private placements where investors were allotted shares from February 08 onwards.
source - www.lbo.lk
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