Attention being given to reconsider leveraging restriction - SEC

Many stock brokers requests to reconsider the recently imposed leveraging restriction, is receiving the attention of the regulator SEC, sources said. Ada Derana reliably learns that the Association of Stock Brokers has written to the SEC Chairperson Indrani Sugathadasa to reconsider the restriction.

Stock brokers claimed that the restriction explains the lull at the Colombo Stock Exchange (CSE) and would adversely affect the investments of highly liquid companies.

On September 14 The Securities and Exchange Commission(SEC) issued a  directive under section 13(c) & 13(h) of the Securities & Exchange Commission Act No. 36 of 1987 as Amended to the CSE to carry out the following;



1.    To mandate the members of the CSE (Stock broking companies ) to absolutely refrain from extending credit to any investor beyond T + 3 days with effect from 1 January 2011, and if credit is to be extended beyond the above specified period to do so only through a margin provided duly registered with SEC.


2.    To mandate the members of the CSE that any backlog of credit already extended by any member be cleared or regularized through a margin provided latest by the 1 January 2011 in compliance with the requirement set out in (1.)