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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » To Rajitha .....A Clarification on credit clearance....

To Rajitha .....A Clarification on credit clearance....

+13
duke
Academic
Aamiable
ss7097
ShareShares
smallville
Rocky
Slstock
Rajitha
mark
milanka
Soundchips
anu
17 posters

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anu

anu
Manager - Equity Analytics
Manager - Equity Analytics

Rajitha..Please see below the excerpts of the market commentary sent by Lanka Securities to the investors yesterday:

Market Review

The market activity in the Colombo stock exchange witnessed sign of recovery after a brief clustering period followed by the downward movement. First few days of the week reflected negative momentum mainly owing to the force selling warranted in terms of SEC directives. Benchmark ASI gained 136.95 points WoW (+1.9%) to close at 7,377.22 points and more liquid MPI jumped 186.61 points WoW (+2.7%) to close at 7,024.63. Average daily turnover of the week dropped to Rs.2.0bn (-31.59%WoW). Foreign participation was 18.9% of the total market activity and at the end of the week foreign investors were the net sellers with a net foreign outflow of Rs. 399.4mn.

 

Outlook

With the end of the credit settlement by broking houses, the market is poised for a up move run. Fundamentally sound stocks witnessed sizable dip in their prices during the past couple of weeks and we expect these stocks to move up during next week. We anticipate steady upward movement in the forthcoming period with sound fundamentals and technicals.

 

unquote


Is this enough of an evidence from brokers to say that credit clearance was taking place until 31st March, 2011? Need more...?

When me and few other members mentioned about credit clearance taking place, you had this to say:

quote Re: some brokers’ debts are in the billions of rupees
Rajitha on Thu Mar 17, 2011 1:01 pm

It seems pointless talking or trying to explain to people that can't grasp with facts! All they want is people to praise them for putting fuel and writing the same rumor they heard from some one else and get upset if any one disagree with them. ( Not worth the effort mono we just get negative rep thats it! ). It seems best to nod along with idiots although you know they are posting baseless rumors and can't even talk 1 minute to try and confirm even if it might have the tiniest bit of truth! BTW ANU we did had some facts unlike your rumors that you trying to point out as facts! All the peoples brokers + mine as we heard have 0 credit left over from last year to clear( Atleast from retailers as i said) . But including you + many others have t+5 credit !
Rajitha
Manager - Equity Analytics


I do not want to hurt you by posting this buddy.... Only a humble request...do not call other members as narrow minded, idiots etc. while you yourself were absolutely wrong; that too in a public forum, which does not reflect good about you...


No offence made...

Soundchips


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

In a growing market credit clearance is not a big issue. several green days during last week helps clear what ever remaining credit. Every day there is a bit of credit clearance going on. Despite all these things market is improving .
once it is start going it is difficult to stop. good for the investors.

3To Rajitha .....A Clarification on credit clearance.... Empty Any More to be cleared by June End. Sat Apr 02, 2011 9:03 am

milanka

milanka
Vice President - Equity Analytics
Vice President - Equity Analytics

The credit clearance and its market response was discussed well in advance in Feb 13th. But not much attention was made to that. And we all know what the response we had during last 2 weeks.

Would it be repeated by 30th June. If they had cleared 50% of the credit then there is another 50% to be cleared by 30th June. Anyway hope the 100% is cleared now and we could have Green in June ..

Refer my post on Feb 13th :-
http://forum.srilankaequity.com/t730-market-responce-to-credit-clearance-50-by-march-2011

http://forum.srilankaequity.com/u188

mark

mark
Expert
Expert

credit clearing session is the best time to enter if you have holding power.........
as we expected foreigners re enter in last week of march and grab oversold midcap counters.........they will focus on more on good fundamental counters in upcoming week............so i believe next week going to be green........... Cool Cool Cool

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Even news papers posted about credit clearance and saying how market will go down further ! But we all saw how that went! These are the same people who posted market went up due to one type of share when it did not contribute even in top 10 to it! They always just post the general consencess! As I said did you ask your broker in there how much credit he cleared for last year settlements this year?
There are over 500 users i would say who use this forum! Why not put a survey and tell them to vote how many had to settle last year credit at this month ? and how many people had t+5 credit?
I can bet not more than 1% had last year credit and over 90% people had t+5 credit!

I did not saw a single poster here saying they had last year credit left to settle at this month! But many who had credit with t+5! Also as I said some big guns might have had some last year credit to clear as I have said countless times! But not the retails!

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Also what kind of a retard broker would clear last year credit by retailers when market is dipping below ASI 7000 when he had ample time to do it when ASI was over 7500 ( up to 7800) and market kept going up ?

If any one of your broker force sold in last months h the credit that was due for you from last year you should check your brain and after that first thing to do would be to change the broker!

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

milanka wrote:The credit clearance and its market response was discussed well in advance in Feb 13th. But not much attention was made to that. And we all know what the response we had during last 2 weeks.

Would it be repeated by 30th June. If they had cleared 50% of the credit then there is another 50% to be cleared by 30th June. Anyway hope the 100% is cleared now and we could have Green in June ..

Refer my post on Feb 13th :-
http://forum.srilankaequity.com/t730-market-responce-to-credit-clearance-50-by-march-2011

Yes watch out for June clearance closer to that period . But SEC rule you never know. They can change. Best thing be ware and act smart depedning on the situation at that time

Rocky

Rocky
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Suggest that Rajitha starts a Poll with multiple questions relating to credit settlement.
Then we can know for sure.

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

Rajitha wrote:Also what kind of a retard broker would clear last year credit by retailers when market is dipping below ASI 7000 when he had ample time to do it when ASI was over 7500 ( up to 7800) and market kept going up ?

If any one of your broker force sold in last months h the credit that was due for you from last year you should check your brain and after that first thing to do would be to change the broker!

Good one. I like this point you made.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

Rajitha wrote:
I did not saw a single poster here saying they had last year credit left to settle at this month! But many who had credit with t+5! Also as I said some big guns might have had some last year credit to clear as I have said countless times! But not the retails!

This is even what I indicated on an earlier post related to credit clearence.. Brokers actully might've favoured their big shots while clearing off the retailers in the sence small ones in fact.. so retailers have no credit at all even T+5 to clear but big shots will have not cleared their 50% even yet. .who knows brokers have to survive too... so the bait is small man..
The other day I had 75K T+5 and my broker wanted me to settle it, I only reduced it to 30K and told him I'll settle by tuesday.. So like wise small quantities may be the target.. while millions are piled up with big shots Mad



Last edited by smallville on Sat Apr 02, 2011 3:10 pm; edited 1 time in total (Reason for editing : edited few typos)

anu

anu
Manager - Equity Analytics
Manager - Equity Analytics

Rajitha wrote:Also what kind of a retard broker would clear last year credit by retailers when market is dipping below ASI 7000 when he had ample time to do it when ASI was over 7500 ( up to 7800) and market kept going up ?

If any one of your broker force sold in last months h the credit that was due for you from last year you should check your brain and after that first thing to do would be to change the broker!

Going by the theory that market was not going down by credit clearance, but because the T+5 issue of retailers as is preached above, market should continue to go down even after 31st March, or should be dull as T+5 is a issue not limited to a period.

If the market is really up in April, than this theory is flawed. No one is going to advertise here that he has credit to clear. It is rather logical thinking.

Market's direction in april will prove whether what was told by me about credit clearance was correct or wrong.

ShareShares


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

anu wrote:
Rajitha wrote:Also what kind of a retard broker would clear last year credit by retailers when market is dipping below ASI 7000 when he had ample time to do it when ASI was over 7500 ( up to 7800) and market kept going up ?

If any one of your broker force sold in last months h the credit that was due for you from last year you should check your brain and after that first thing to do would be to change the broker!

Going by the theory that market was not going down by credit clearance, but because the T+5 issue of retailers as is preached above, market should continue to go down even after 31st March, or should be dull as T+5 is a issue not limited to a period.

If the market is really up in April, than this theory is flawed. No one is going to advertise here that he has credit to clear. It is rather logical thinking.

Market's direction in april will prove whether what was told by me about credit clearance was correct or wrong.


Since end of last year brokers were keep on requesting to clear even the slightest difference in the account. March they requested to maintain a Zero balance. Clearance went on since October to March. I think they request all investors to clear regardless of big or small. They cleared even the high net worth investors balances. What ever remaining balance should be minimal.

They say their licenses cannot be renewed if they do not settle. Slightest deficit they recover from the margin account then the investor pay an interest to the bank and the brokers do not have a problem settling them. It seems to have been solved to a large extent, what ever left seem to be small and manageable. Market does not show any evidence of force selling these days there are no sellers for some counters, some counters sellers were there at very high levels, and I kept some buy orders at a reasonable level which were unsuccessful on Thursday and Friday. seller were setting higher levels. Lot of buyers were seen there were buyers above my level within a short period of my placing an order.

ss7097

ss7097
Manager - Equity Analytics
Manager - Equity Analytics

Rajitha wrote:
There are over 500 users i would say who use this forum! Why not put a survey and tell them to vote how many had to settle last year credit at this month ? and how many people had t+5 credit?
I can bet not more than 1% had last year credit and over 90% people had t+5 credit!

I did not saw a single poster here saying they had last year credit left to settle at this month! But many who had credit with t+5! Also as I said some big guns might have had some last year credit to clear as I have said countless times! But not the retails!

Hi all,

I'm one of the guys who couldn't clear my credit which took before 1st January 2011. I had to sell some of my shares for less than what I've purchased to do so. Still I've 50% of credit to settle in June 30th too.
I'm new and didn't understand the market behaviour and the time to do without any lost. I need your guys help to understand market behaviour for next 03 months and high time to settle my balance credit without any lost.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

According to my broker, they get daily based T+5 reports, so they call up and ask to clear it.. if not they'll clear it off for u.. so this T+5 is going to be the buzz word in future at least till June 30.. But I dont expect the market to be improved till the avurudu season ends..
May be from Tuesday onwards, we may again see some volatility on many counters due to ppl want to cash in for avurudu celebration..Its rather a seasonal effect..
So Only after they return we can highly enjoy the market.. say may be from 25th, we may see a good performance..
But again big fish who haven't had a chance earlier may get into the attractive counters if it goes down..
Last Friday it was a 2% up. Lets see if at least slowly market rises even 60-70 points a day its healthy Wink

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

ss7097 wrote:
Rajitha wrote:
There are over 500 users i would say who use this forum! Why not put a survey and tell them to vote how many had to settle last year credit at this month ? and how many people had t+5 credit?
I can bet not more than 1% had last year credit and over 90% people had t+5 credit!

I did not saw a single poster here saying they had last year credit left to settle at this month! But many who had credit with t+5! Also as I said some big guns might have had some last year credit to clear as I have said countless times! But not the retails!

Hi all,

I'm one of the guys who couldn't clear my credit which took before 1st January 2011. I had to sell some of my shares for less than what I've purchased to do so. Still I've 50% of credit to settle in June 30th too.
I'm new and didn't understand the market behaviour and the time to do without any lost. I need your guys help to understand market behaviour for next 03 months and high time to settle my balance credit without any lost.


The best thing u can do is forget abt buying these days and observe the market.. if you have money on hand, avg some of the best counters u have but dont go for margin or credit now..
As I said earlier, if market goes down near the avurudu season, u can buy with money u have.. if not u'll have to wait till it rises.. so better thing now is observe..

anu

anu
Manager - Equity Analytics
Manager - Equity Analytics

ss7097 wrote:
Rajitha wrote:
There are over 500 users i would say who use this forum! Why not put a survey and tell them to vote how many had to settle last year credit at this month ? and how many people had t+5 credit?
I can bet not more than 1% had last year credit and over 90% people had t+5 credit!

I did not saw a single poster here saying they had last year credit left to settle at this month! But many who had credit with t+5! Also as I said some big guns might have had some last year credit to clear as I have said countless times! But not the retails!

Hi all,

I'm one of the guys who couldn't clear my credit which took before 1st January 2011. I had to sell some of my shares for less than what I've purchased to do so. Still I've 50% of credit to settle in June 30th too.
I'm new and didn't understand the market behaviour and the time to do without any lost. I need your guys help to understand market behaviour for next 03 months and high time to settle my balance credit without any lost.


Hope this will help Rajitha for his survey....!

ss7097

ss7097
Manager - Equity Analytics
Manager - Equity Analytics

smallville wrote:
ss7097 wrote:
Rajitha wrote:
There are over 500 users i would say who use this forum! Why not put a survey and tell them to vote how many had to settle last year credit at this month ? and how many people had t+5 credit?
I can bet not more than 1% had last year credit and over 90% people had t+5 credit!

I did not saw a single poster here saying they had last year credit left to settle at this month! But many who had credit with t+5! Also as I said some big guns might have had some last year credit to clear as I have said countless times! But not the retails!

Hi all,

I'm one of the guys who couldn't clear my credit which took before 1st January 2011. I had to sell some of my shares for less than what I've purchased to do so. Still I've 50% of credit to settle in June 30th too.
I'm new and didn't understand the market behaviour and the time to do without any lost. I need your guys help to understand market behaviour for next 03 months and high time to settle my balance credit without any lost.


The best thing u can do is forget abt buying these days and observe the market.. if you have money on hand, avg some of the best counters u have but dont go for margin or credit now..
As I said earlier, if market goes down near the avurudu season, u can buy with money u have.. if not u'll have to wait till it rises.. so better thing now is observe..

Thanks smallville. I'll do as you said.

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

anu wrote:
ss7097 wrote:
Rajitha wrote:
There are over 500 users i would say who use this forum! Why not put a survey and tell them to vote how many had to settle last year credit at this month ? and how many people had t+5 credit?
I can bet not more than 1% had last year credit and over 90% people had t+5 credit!

I did not saw a single poster here saying they had last year credit left to settle at this month! But many who had credit with t+5! Also as I said some big guns might have had some last year credit to clear as I have said countless times! But not the retails!

Hi all,

I'm one of the guys who couldn't clear my credit which took before 1st January 2011. I had to sell some of my shares for less than what I've purchased to do so. Still I've 50% of credit to settle in June 30th too.
I'm new and didn't understand the market behaviour and the time to do without any lost. I need your guys help to understand market behaviour for next 03 months and high time to settle my balance credit without any lost.


Hope this will help Rajitha for his survey....!

One guys out of like 500 ? lol! you serious ? Go read what I posted first post regarding this! this is the same thing I posted!

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics

Brokers always call and said clear everything, now they are not calling.

then stocks became green

Academic


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Yesterday I learnt from a source that one particular broker has cleared only 50% of outstanding balance as of December. And another 50% to be cleared by June.

Further, they have a policy of maintaining current credit balance within 50% of December balance on 15 and 30/31 of every month. In other words if any client exceeds 50% of December balance after 31 March, by exceeding T+5, they have to settle it before 1st and 16. So that reports generate on 1st and 16th show no new unauthorized broker credits.

But, I could not clarify, if they implement the same policy for both small and big investors. However, as the broker has cleared only 50% (no more than 50%) of retail credit (the source confirmed this), big ones also must have to clear 50% of their balance too, to reduce total broker credits to 50% of December balance (It is a mathematical truth).

Following are the implications of this policy, if this is true for all brokers

1. March end drop was due to credit clearance.
2. There may be a dull market around mid and end of each month till 30th June.
3. There would be another selling pressure before end June to clear another 50% (in addition to what ever T+5 exceeds).

It is too early to predict when above point 3 occurs.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

Academic wrote:

But, I could not clarify, if they implement the same policy for both small and big investors. However, as the broker has cleared only 50% (no more than 50%) of retail credit (the source confirmed this), big ones also must have to clear 50% of their balance too, to reduce total broker credits to 50% of December balance (It is a mathematical truth).

Or else retailer could stick to 75% while big shots only cleared 25%.. either way it could also balance broker's credit requirement, wont it?

milanka

milanka
Vice President - Equity Analytics
Vice President - Equity Analytics

Academic wrote:[Following are the implications of this policy, if this is true for all brokers

1. March end drop was due to credit clearance.
2. There may be a dull market around mid and end of each month till 30th June.
3. There would be another selling pressure before end June to clear another 50% (in addition to what ever T+5 exceeds).

It is too early to predict when above point 3 occurs.

Thanks for sharing.

http://forum.srilankaequity.com/u188

anu

anu
Manager - Equity Analytics
Manager - Equity Analytics

Academic wrote:
Yesterday I learnt from a source that one particular broker has cleared only 50% of outstanding balance as of December. And another 50% to be cleared by June.

Further, they have a policy of maintaining current credit balance within 50% of December balance on 15 and 30/31 of every month. In other words if any client exceeds 50% of December balance after 31 March, by exceeding T+5, they have to settle it before 1st and 16. So that reports generate on 1st and 16th show no new unauthorized broker credits.

But, I could not clarify, if they implement the same policy for both small and big investors. However, as the broker has cleared only 50% (no more than 50%) of retail credit (the source confirmed this), big ones also must have to clear 50% of their balance too, to reduce total broker credits to 50% of December balance (It is a mathematical truth).

Following are the implications of this policy, if this is true for all brokers

1. March end drop was due to credit clearance.
2. There may be a dull market around mid and end of each month till 30th June.
3. There would be another selling pressure before end June to clear another 50% (in addition to what ever T+5 exceeds).

It is too early to predict when above point 3 occurs.

This is another evidence for you Rajitha...

World is not yellow just because we look at it with a jaundiced eye...!

Academic


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

smallville wrote:
Academic wrote:

But, I could not clarify, if they implement the same policy for both small and big investors. However, as the broker has cleared only 50% (no more than 50%) of retail credit (the source confirmed this), big ones also must have to clear 50% of their balance too, to reduce total broker credits to 50% of December balance (It is a mathematical truth).

Or else retailer could stick to 75% while big shots only cleared 25%.. either way it could also balance broker's credit requirement, wont it?

I have two counter arguments/answers to you.

1. What you say is mathematically wrong. To illustrate this, say retailers have total credit of 200 and big shots have total credit of 1000 (since they are BIG). So that the broker has total credit of 1200.

If retailers cleared 75%, that is 150 and big shots 25%, 250. The total remaining credit with broker is 200-150+1000-250=800.

New debt balance with the broker is 800/1200= 66.76%.

This is a violation of 50% rule of SEC.

2. My source confirmed that they have cleared only 50% from retailer's. Not more than that (as I stated in the previous post).

Thus what you suggest is impractical to happen.

duke


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

does this 50% credit people are keeping with the brokers interest free or are they paying like 15-20% interest everyday to brokers since december and earlier?

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