Lankan regulator in emergency session on stockmarket crisis

Sri Lanka’s Securities & Exchange Commission (SEC) was due to meet at an emergency session at 10.30 am this morning (Friday) to discuss a major crisis brewing in the stock market, stockmarket sources said. The board members (commissioners) were assembling for the meeting.

Share prices at the Colombo Stock Exchange have sunk this week, leading to its lowest turnovers in recent times, amidst speculation that SEC Director-General Malik Cader was likely to step down or asked to resign.

The sources said that some politically, influential investors were putting pressure on government higher-ups to ease controls in the market, saying it was hampering business. There has a lot of concern in recent times over insider trading and market manipulation in the market. (DEC)

http://www.sundaytimes.lk/latest/12214-lankan-regulator-in-emergency-session-on-stockmarket-crisis.html

What do you think guys?

Insider trading and market manipulation are criminal acts and these needs to be stopped. Just to gain a short term profit insider trading and market manipulation should not be over looked. Insider traders and market manipulators should be prosecuted by law. We should take as an example what happened to Raj Rajaratnam in USA.

In my opinion SEC Director-General Malik Cader has been asked to step down because he was doing a good job and he was trying to reduce market manipulation and insider trading.

Insider trading and market manipulation needs to be stopped or it’s going to have long term issues for the CSE
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@ Investor99

SEC is not considering the bigger picture when curbing insider trading.

With all the recent regulations, how successful they were in curbing this ?
Do you think they have achieved anything other than the market downturn.

They are playing a stupid game in the name of insider trading.

This is not the way for that. SEC gotta identify some big fish who have been pumping and dumping stocks over the past few months and ask for explanation for investing in such shares.

They have only done so with PCH chairman. But what s with the real big fish like deleted, deleted. This is where the bias politics come in.

For me this is not regulation, its favoration.

Investor99 wrote:........In my opinion SEC Director-General Malik Cader has been asked to step down because he was doing a good job and he was trying to reduce market manipulation and insider trading.
...........................
.

What ??

Asked to step down because he was doing a good job

Donot talk nonsense man.

Whatever said and done the market should be a level playing field or we are going to be the ultimate losers the HNWI will make their money and go off and the foreign investors are going to shy away from the market saying it over valued one example is HVA is it even worth Rs 42 no and there are many more overvalued shares like this in the CSE. There should be sacrifices made and market will not go up every day.

Every market that goes up without any reason should come down. This is a market correction.

If insider trading or market manipulation is allows where we are going to draw the line? How many overvalued shares do you want to have in CSE?

I'm not happy about the SEC running around like this. They made broker credit legal at 0% leverage, and that's that. trying to molly coddle beyond that is simply too much reactionary involvement.

Hi
By now we all should stop buying HNWI promoted stocks, (Not only HVA, how about Lanka Hospitals, ), we should think more strategically. Buy only the shares which has value.......It may be difficult but we must try.....

All these were done to stop a bubble forming in the CSE and to allow a level playing field for every investor and to make CSE to be recognised as an emerging market in the future.

Sorry to say this but there are so many kindergarten investors in the forum who don’t understand how the stock market works and who think the CSE should go up every day and they can make millions in days.

Investor99 wrote:Insider trading and market manipulation are criminal acts and these needs to be stopped. Just to gain a short term profit insider trading and market manipulation should not be over looked. Insider traders and market manipulators should be prosecuted by law. We should take as an example what happened to Raj Rajaratnam in USA.

In my opinion SEC Director-General Malik Cader has been asked to step down because he was doing a good job and he was trying to reduce market manipulation and insider trading.

Insider trading and market manipulation needs to be stopped or it’s going to have long term issues for the CSE
.

We so saw what good the mighty regulator has done for the past months. He was so good in doing it, the market was fabulous so far. Catching few like PCH top is true. But as for many knows, many of Maliks Close subbordinates were doing a lot of nice looking profitable trades. Unfortunately Malik didnt see such. What a mighty.

Regulating is good. But has to be done professionally , with a good plan and not harming the market.

Example - If my companies stores manager, Asst manager and Executives are playing. I cant fire all at once and let the purchasing department close down. But i will have to impliment the controls with good planing, where business would not be harmed. And fire one by one who played with a well placed paln

The thing is how they regulate and whom they regulate. regulation should be equally applied to everyone across the board. not only to small investor, while the powerful get away.

Objective may be good, but the regulation is biased

OneRupee,

100% with you. Further there should be an investigation whether he or any connected party has earned fraudulently, as we can see clearly, most of the SEC decisions got leaked prior to being published.

There are lots of ideas in this forum about regulation. Some are commenting either without knowledge or just to mislead others about regulation. They think regulation is restrictions.
Can any body, please explain the actions taken by our regulators to regulate the market. My opinion is they didn’t regulate. But they just restrict the free market. Primary objectives of a stock exchange are easy transferability of shares and raising funds for the companies when required. In our market both these objectives are failed during last one year period. Liquidity is dropping day by day.
See the examples in USA. They didn’t impose restrictions on the market. But they identified the culprits and punished them. Our regulators are talking about stopping insider dealings and other frauds. But their own committee decisions are leaked in the past, before making them public.
Today, Shares of Tokyo Electric Company went up by 40%, imagine in a single day. If this happened in Sri Lanka, they will apply the secret formula and impose a price band. Price bands are always affecting small investors negatively.
Some time back, even in CSE there was the circuit breaker system. When price of a share appreciate/depreciate by a certain percentage, trading will stopped for that share and CSE is calling explanations from the company. After publishing that explanation, trading will commence again probably in the same day. But in the price band system, nobody knows the mechanism as it is a top secret and the band is imposed after market closes. Further, if there was a justifiable reason for the increase/decrease, still the price band is in force. Don’t you think it’s Absurd!

thawamadi wrote:

Investor99 wrote:........In my opinion SEC Director-General Malik Cader has been asked to step down because he was doing a good job and he was trying to reduce market manipulation and insider trading.
...........................
.

What ??

Asked to step down because he was doing a good job

Donot talk nonsense man.

Whoever expects that retailers need 100% clean governing body in a 3rd world country. I must say he/she is living in a dream world.

As I told many many times before power and money can change things. Especially in a tiny market like CSE.

Whoever is trying to invest at CSE, please dont expect miracles from SEC.

hariesha wrote:There are lots of ideas in this forum about regulation. Some are commenting either without knowledge or just to mislead others about regulation. They think regulation is restrictions.
Can any body, please explain the actions taken by our regulators to regulate the market. My opinion is they didn’t regulate. But they just restrict the free market. Primary objectives of a stock exchange are easy transferability of shares and raising funds for the companies when required. In our market both these objectives are failed during last one year period. Liquidity is dropping day by day.
See the examples in USA. They didn’t impose restrictions on the market. But they identified the culprits and punished them. Our regulators are talking about stopping insider dealings and other frauds. But their own committee decisions are leaked in the past, before making them public.
Today, Shares of Tokyo Electric Company went up by 40%, imagine in a single day. If this happened in Sri Lanka, they will apply the secret formula and impose a price band. Price bands are always affecting small investors negatively.
Some time back, even in CSE there was the circuit breaker system. When price of a share appreciate/depreciate by a certain percentage, trading will stopped for that share and CSE is calling explanations from the company. After publishing that explanation, trading will commence again probably in the same day. But in the price band system, nobody knows the mechanism as it is a top secret and the band is imposed after market closes. Further, if there was a justifiable reason for the increase/decrease, still the price band is in force. Don’t you think it’s Absurd!

You are right heriesha.SEC is not properly managed.Management has forgotten all objectives of SEC and key officials are responsible for present down fall. All economic and financial parameters are fine at present. Therefore no reason for this much of a drop otherthan inefficiency of the regulating and monitoring institutions.

None of us know how the price band works, not even the broker, also when some shares shot up very high the price band did not come 2 effect.

Regard to manipulation the regulators say that they monitor the way stock price tend to move, mainly for large qty and the pattern of buying them. However they cannot prevent a dumping of the share at a lower price before others could realize that. Since in a day trade comm rates are less so with small margin many trade. Which a normal trader does not notice until the next day. Therefore dumping cannot be taken as illegal or manipulation since its his share and he has a right to sell at any price.

IPO's lower price shares cannot be traded for 6 Months therefore it will protect the buyer.