Sri Lanka SEC looking "favourably" at broker credit
Aug 08, 2011 (LBO) - Sri Lanka's Securities and Exchange Commission is looking "favourably" at allowing stock brokers to grant margin facilities following a request from the industry, an official said.
Two weeks ago a majority of Sri Lanka's stock brokers wrote to the SEC asking at least to be allowed to provide credit up to shareholder capital in their firms. "The commission will look at the proposal very favourably to grant margin facilities to small investors," SEC director General Malik Cader said.
The commission is expected to make a decision this week.
The regulator cracked down on broker credit amid bubble fears last year with some analysts estimating that brokers were exposed up to 8.0 billion rupees to their clients.
Since then the market has, earnings of several companies have caught up with valuations.
Stock prices have been falling steeply which broker have attributed to forced selling, which analysts say in an indicator of the level that the market has become dependent on credit.
Stocks were down about 0.9 percent mid-day Tuesday. Meanwhile other Asian markets also plunged after the US credit was downgraded by Standard & Poors.
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