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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Manipulations and Insider Trading at CSE

Manipulations and Insider Trading at CSE

+3
pushpakumara
amilaela
Quibit
7 posters

Go down  Message [Page 1 of 1]

1Manipulations and Insider Trading at CSE Empty Manipulations and Insider Trading at CSE Sun Dec 11, 2011 8:59 am

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Sri Lanka’s Stock Market In The Doldrums
By Mandana Ismail Abeywickrema - The Sunday Leader
http://www.thesundayleader.lk/2011/12/11/manipulations-and-insider-trading-at-cse/

The country’s stock market remains flat while regulators have come under pressure for trying to regulate the market that is driven by insider dealings and manipulations. An unfortunate scenario given that the post war benefits could have otherwise pushed the stock market higher.

The recent activities at the stock exchange has prevented a level playing field for all investors and has even discouraged many small time investors who were beginning to invest monies in stocks.

The Sunday Leader reliably learns that the Colombo stock market is currently manipulated by a cartel that includes a few high net worth individuals who trade on large volumes and a few stockbrokers.

These individuals, including some new comers to the market, have wielded political powers to remove any obstacle to their trading and safeguard their personal interests.
The names of a few businessmen and investors have been publicised in the media recently as being involved in manipulating the market. The key names that have figured in these reports are of businessmen deleted Perera, deleted deleted and deleted Silva.

A source attached to the Colombo stock market confirmed these reports by saying “the reports in the media are not wrong.”

They say that while the real traders in the market amounted to around 20,000 to 30,000, the decisions made for the greater good of the entire country have come under pressure.
However, sources from the Securities and Exchange Commission (SEC) told The Sunday Leader that there is no solid evidence to back allegations of insider dealings and manipulations despite it taking place in the stock market.

“It is all circumstantial evidence, but it does take place,” sources said.
The cartel is said to have entered the stock market only to increase their portfolios and not to benefit the economy.

Attempts by the SEC to regulate the Colombo Stock Exchange (CSE) have been a much discussed topic in the past few weeks. The regulations and investigations into insider dealings finally resulted in the removal of the SEC Director General Malik Cader and the resignation of the Commission’s Chairman Indrani Sugathadasa.

One of the main criticisms levelled against the SEC by the stock brokering community is that the SEC was trying to control the stock exchange.They believe the stock market should be allowed to function freely in order to bring in more investments to the country.
A senior stockbroker told The Sunday Leader that the brokering community has worked hard to bring in investments to the market.

He accused the senior officials of the SEC and CSE of trying to apply certain regulations practised in overseas markets to the Sri Lankan stock market.

“It is not practical for a small market like in Sri Lanka. The mechanism needs to be put in place before trying to regulate the market,” he said, adding that there was in fact no need to regulate the market.

“There are instruments used in other markets like derivatives and short selling that have not been introduced to Sri Lanka.

The stockbroker claimed the SEC shouldn’t be concerned about credit given by stockbrokers. “Most stockbrokers are under holding companies or high net worth individuals. Therefore the monies will come in. If a broker goes bankrupt that is his problem,” he observed.

When asked about manipulation in the stock market, he noted that it was not illegal.
According to him, it is up to the buyer to be prudent when purchasing stocks.

“The SEC should not be concerned to know from where the money has come in as long as settlements are made,” he said. Nevertheless, the stockbroker pointed out that the bottom line is for the SEC to stop interfering in the stock market.

While the stockbrokers argue that the SEC should refrain from regulating the market, the Commission maintains that it is concerned over creating a stable market. The argument then is whether the regulator, in this case, the SEC, should regulate the stock market.

As pointed out by sources in the SEC, a market without SEC’s regulation would be like a cricket match played without an umpire.

Former SEC Chairperson, Indrani Sugathadasa said the Commission is mandated to protect the investors and a stable market needed to be established in order to do so. The stock brokering community was critical of the SEC’s regulations like the price band and the minimising of credit.

She observed that the SEC had imposed several regulations, which were later eased, when the market was experiencing high volatility.
“We cannot have a risk free market without maintaining systematic stability. We were working on it,” she told The Sunday Leader referring to the role played by the SEC in the stock market.

The SEC was working with McKinsey & Company, Inc. branch office in India to set up what is called a central counter party system, which would prevent any settlement failures.
“A stable system would safeguard the interests of the investors as well as the brokers,” Sugathadasa said.

She noted that the brokers played an important role since they ran the stock market. However, she explained the regulator in Sri Lanka has to develop and promote the market while regulating it.

“But can we promote the market when there is manipulation?” she asked, adding that it would be the poor people who would fall victim to the situation. She observed that while manipulations in the stock market happened in all parts of the world, it could affect the performance of the Sri Lankan stock market since it is still a developing market.

“We want to have a stable market where more foreign investors could be invited,” she said.
When asked if manipulations and insider trading could be proved, Sugathadasa said it could not. “It is difficult to prove insider trading and manipulations.”
Sugathadasa, however, refrained from speaking about insider dealings and manipulations in CSE.

It should also be noted that it is the lack of financial literacy among the people that has also posed a problem with regard to the stock market. If the investors were educated to look at the fundamentals of stocks they would not fall prey to manipulations in the market.
Sugathadasa admitted saying that the stock market has been confined to a small group since the financial literacy levels were not at a satisfactory level.

“The Capital Market Education and Training Division of the SEC is engaged in educating persons already involved in the stock market as well as those outside the system,” she said. Meanwhile, many attempts made by The Sunday Leader for a comment from the President of the Stockbrokers’ Association, Sriyan Gurusinghe, failed. Gurusinghe failed to respond to the questions e-mailed to him even at the time of going to press.

Be that as it may, the stock market continues on a weak note. When trading closed for the week on Friday, the main All Share Price Index had fallen by 0.51 per cent (30.75 points) to 5,996.44, while the Milanka index had dropped by 0.34 percent (17.85 points) to close at 5,231.12. The turnover had fallen to Rs. 464 million from Rs. 517 million on Thursday.

http://www.thesundayleader.lk/2011/12/11/manipulations-and-insider-trading-at-cse/

amilaela

amilaela
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

good post

https://www.facebook.com/profile.php?id=100001851586843

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Too many rules will affect the interest of any game whether it is crikcet or rugger or any other. Because it affects the flow of the game. If refree blow the whistle every minute for breaking rules of the game there will be lot of stoppages and spectators will become bored of the game and they will lose the interest on the game. Likewise in stock market too many regulations it will affect the interest of the investors.

Regulations are ok as far as they do not affect the free flow of the market. So it is worth introducing rules which suits to our market rather than importing unsuitable rules from a foreign market considering the size of this market, distribution of wealth amongst the investors (knwoledge, money, credit worthiness etc.).
So I hope under the present leadership we expect some change which will bring positive results for the market. So we are awaiting for the next move which instill the confidence of investors.

bakapandithaya

bakapandithaya
Vice President - Equity Analytics
Vice President - Equity Analytics

As said in the article, these rules can be imposed after mkt having big investments. It is very small, so they should remove the present rules & allow shares freely. Then the price of a share will be decided based on Demand & Supply

Hawk Eye

Hawk Eye
Expert
Expert

Few Networth has networked to suck out money. SEC didnt have the backbone to pull them out directly. Rather punished the whole market. Mrs.Sugathadasa talks crap.

If they have done it today HVA.IDL.PCH.OGL wouldnt have been listed and EAST,CLND,REEF,GREG,DPL,CLPL,ASCOT wouldnt have been trading at these prices.

Those who have listed some crap companies in CSE has become HNWI. And teamed up with some stockbrokering CEOs and Senior Brokers and already established Gamblers who has a gambling background. This is becomming a MAFIA.

Most of the margin providers are Banks, and doesnt want to take high risk.Current situation has put them to push the panic button.

These whole thing is lack of indepth knowledge and unplanned regultory rules of SEC.

On the other hand some members in the MAFIA has burnt their finger,rather their hands heavily. Should let them suffer a bit and to dig their own grave.


Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

pushpakumara wrote:Too many rules will affect the interest of any game whether it is crikcet or rugger or any other. Because it affects the flow of the game. If refree blow the whistle every minute for breaking rules of the game there will be lot of stoppages and spectators will become bored of the game and they will lose the interest on the game. Likewise in stock market too many regulations it will affect the interest of the investors.

Regulations are ok as far as they do not affect the free flow of the market. So it is worth introducing rules which suits to our market rather than importing unsuitable rules from a foreign market considering the size of this market, distribution of wealth amongst the investors (knwoledge, money, credit worthiness etc.).
So I hope under the present leadership we expect some change which will bring positive results for the market. So we are awaiting for the next move which instill the confidence of investors.

OK partially agreed your comments, lets say if the players played according to law then there is no necessary referee to interfere no?
Basic problem in Sri Lanka is Law makers are the law breakers.
Good luck.

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Kumar wrote:
pushpakumara wrote:Too many rules will affect the interest of any game whether it is crikcet or rugger or any other. Because it affects the flow of the game. If refree blow the whistle every minute for breaking rules of the game there will be lot of stoppages and spectators will become bored of the game and they will lose the interest on the game. Likewise in stock market too many regulations it will affect the interest of the investors.

Regulations are ok as far as they do not affect the free flow of the market. So it is worth introducing rules which suits to our market rather than importing unsuitable rules from a foreign market considering the size of this market, distribution of wealth amongst the investors (knwoledge, money, credit worthiness etc.).
So I hope under the present leadership we expect some change which will bring positive results for the market. So we are awaiting for the next move which instill the confidence of investors.

OK partially agreed your comments, lets say if the players played according to law then there is no necessary referee to interfere no?
Basic problem in Sri Lanka is Law makers are the law breakers.
Good luck.

Any game played internationaly or localy has rules to maintain impartiality. It applies across the board whether it is Asian, African , European etc. Whether the country is Big or small / developed, underdeveloped ,rules are equally apply when it comes to sports. As an example when we play cricket with Australia the umpires are there not because sri lankans break the rule it is a accepted norm in cricketing. Likewise regulator is there to maintian impartiality in the stock market.

Although I can not comment on extent of Law makers breaking rules in Sri lanka, It can not be a problem only in Sri Lanka. If it is in a big way in our country you and I can not be out on the road and do our usual day today activities as we wish.I am sure majority of people in Sri Lanka are abide and obey the law of the country. You may be refering to a mere 1 or 2% who breaks the law of the country. Just to clear any wrong impressions on Sri Lanka Very Happy

Wish you too good luck!

K.Haputantri

K.Haputantri
Co-Admin

Sunday Leader article is an eye opener to the new Chairman and Members of the SEC. If they think that fixing manipulators is difficult they should look for every possible method to fix them. Otherwise they should getout honestly as was done by Indrani, because they get paid by tax payer's money, their perks are funded by tax payers money.

Being investors who are trapped in the Market, we have to express our veiws very open and strong as the the new lot (at the SEC) too might be bogged down by interested parties as was done to Indrani & Cadre.

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

pushpakumara wrote:
Kumar wrote:
pushpakumara wrote:Too many rules will affect the interest of any game whether it is crikcet or rugger or any other. Because it affects the flow of the game. If refree blow the whistle every minute for breaking rules of the game there will be lot of stoppages and spectators will become bored of the game and they will lose the interest on the game. Likewise in stock market too many regulations it will affect the interest of the investors.

Regulations are ok as far as they do not affect the free flow of the market. So it is worth introducing rules which suits to our market rather than importing unsuitable rules from a foreign market considering the size of this market, distribution of wealth amongst the investors (knwoledge, money, credit worthiness etc.).
So I hope under the present leadership we expect some change which will bring positive results for the market. So we are awaiting for the next move which instill the confidence of investors.

OK partially agreed your comments, lets say if the players played according to law then there is no necessary referee to interfere no?
Basic problem in Sri Lanka is Law makers are the law breakers.
Good luck.

Any game played internationaly or localy has rules to maintain impartiality. It applies across the board whether it is Asian, African , European etc. Whether the country is Big or small / developed, underdeveloped ,rules are equally apply when it comes to sports. As an example when we play cricket with Australia the umpires are there not because sri lankans break the rule it is a accepted norm in cricketing. Likewise regulator is there to maintian impartiality in the stock market.

Although I can not comment on extent of Law makers breaking rules in Sri lanka, It can not be a problem only in Sri Lanka. If it is in a big way in our country you and I can not be out on the road and do our usual day today activities as we wish.I am sure majority of people in Sri Lanka are abide and obey the law of the country. You may be refering to a mere 1 or 2% who breaks the law of the country. Just to clear any wrong impressions on Sri Lanka Very Happy

Wish you too good luck!


As a Srilankan we need to defend our country but we need to acknowledge and accept the facts also no?

What you said is 100% correct "mere 1 or 2% who breaks the law of the country",
but bitter truth they are in the power.

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