Wednesday, August 17, 2011

SEC relaxes stockbroker credit restrictions

The Securities and Exchange Commission of Sri Lanka (SEC) at a Special Commission Meeting held on August 15 has decided to relax the restriction imposed on stockbrokers in extending credit to investors 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 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.

The SEC has directed the Colombo Stock Exchange (CSE) 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.

In addition, SEC will amend the relevant provisions of the Member Regulations of the CSE in such manner to be consistent with this Directive and mandates 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 two market days after the end of each month.

It is also mandatory to disseminate this Directive to all Members of the CSE and this Directive shall be effective from the date hereof.

source - www.dailynews.lk

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