The Securities and Exchange Commission of Sri Lanka (SEC) at a Special Commission Meeting held on 15th August 2011 reviewed the restriction imposed on Stock Brokers in extending credit to investors and has decided to relax the said restriction subject to certain prudential requirements being met by the Licensed Stock Brokers, in order to facilitate retail investors to have access to credit by such Licensed Stock Brokers, the capital markets watchdog said in a statement announcing a new directive under Section 13 (C) of the SEC Act No. 36 of 1987 as amended.
"The SEC took cognizance of the improving stability in the capital market together with the concerns expressed by the Colombo Stock Brokers Association and retail investors and decided to relax the said restriction subject to prudential requirements as mentioned below.
"Therefore, the SEC hereby directs the Colombo Stock Exchange (CSE) as follows:
"To permit Licensed Stock Brokers to extend credit to investors over T+3 days based on the computation of Liquid Assets less Obligations, maintaining a leverage at zero level as set out in Annexure 1 hereto;
"To amend the relevant provisions of the Member Regulations of the CSE in such manner to be consistent with this Directive;
"To mandate Licensed Stock Brokers to reconcile daily positions taken against the Liquid Assets by such Licensed Stock Broker and to submit on a monthly basis a declaration to the SEC and CSE confirming the position of Liquid Assets less Obligations as it stands at the end of each month. The declaration to be submitted within 2 market days after the end of each month;
"To disseminate this Directive to all Members of the CSE.
"This Directive shall be effective from the date hereof (August 16)," the SEC said.
source - www.island.lk
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