Further relief on broker credit
Charumini DE SILVA
The Securities and Exchange Commission of Sri Lanka (SEC) has granted
further relief in respect of broker credit.
The brokers will have to clear 25 percent remaining debtors by
September 30 and the balance 25 percent by December 31.
Securities and Exchange Commission of Sri Lanka at its 278th Meeting
held on May 13, 2011 has decided to grant further relief in respect of
the time granted to stock brokers to clear their remaining 50 percent of
the debtor balance, SEC press release said yesterday. Under this 25
percent of the remaining debtors over T+3 days need to be cleared by
September 30, 2011; and the balance 25 percent to be cleared by December
31, 2011.
The Commission decision to grant this relief period was based on
improved market conditions and majority of the stock broking companies
being able to reduce the risk exposure of debtors over T+3 days by 50
percent as at March 31, 2011 and representations made by market
participants, a CSE press release said. Securities and Exchange
Commission Chairperson Indrani Sugathdasa said the commission took the
decision considering the current situation of the brokers in settling
their debts.
“The direction was made for the benefit of all stakeholders,” she
said.
“All these directives may not be welcomed by all stakeholders, but
these directives will certainly benefit the capital market in the
long-run,” she said.
Stock Brokers Association President Shriyan Gurusinghe said they
welcome the directives made by the SEC by becoming more flexible. “It is
an encouraging move,” he said.
He said the brokers sincerely expect that the SEC would further
increase the T+5 to T+10 considering the practicality of it.
“The commission’s intention on improving market settlements much more
effective via slips rather than using cheques will definitely benefit
all stakeholders of the capital market. This is the way forward of the
market and it will avoid settlement delays. We must encourage all
stakeholders to use slips,” Gurusinghe said. |
