Securities and Exchange Commission’s (SEC’s) postponement of stockbroker ban in giving credit to investors by six months to June 30 of next year provided no relief to the bourse, which, week on week (WoW) saw the benchmark ASI fall by 114.93 points (1.8%) to 6,432.75 and the more sensitive MPI by 170 points (2.4%) to 6,885.45 points at Friday’s close, according to provisional data.
And recovery of 50% of such credit by March 31, 2010 might not be a fillip. Market sources attributed several reasons for this negativism. Among those was the 10% price band imposed by the SEC on price volatility of stocks for a period of 15 market days based on a “secret” formula. “As a result investors don’t want to go after stocks where there is a rapid upward movement in their share prices,” the sources said.
No one knows the mechanics of this formula. It goes against the principles of transparency, they said.
The sources further said that though the SEC has postponed the imposition of broker credit to investors, brokers have been slow to reactivate their credit markets, another impediment to market growth.
However other sources attributed SEC’s temporary waiver of broker credit as “postponement of the agony.”
source - http://www.thesundayleader.lk/?p=29320
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