8 stockbroking firms in crisis ?

I saw this article in Srilankamirror and deleted ( don't know how reliable sources are these ).

What they mean by " Cease Operations ? " what happens to excising customers ?

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Certain stockbroking firms in the Colombo are facing a capital crisis, reports say.

According to sources, at least 08 out of the 29 active stockbroking firms are facing a critical capital crisis.

Speaking to media, stockbrokers, regulators as well as investors have complained that chiefs of certain companies are shifting towards unethical practices, even violating stock market regulations, in a bid to recover their marginal lendings.

According to reports, the crisis ridden firms are even unable to meet the minimum capital limit. (The minimum capital limit for a stockbroking firm is Rs. 35 million.)

The crisis has occured in a backdrop of low turnover conditions in the stock market, it is said.

Meanwhile, it is revealed that a certain group of stockbrokers are prepared to request the Securities and Exchange Commission of Sri Lanka (SEC) to allow them to cease operations (without cancelling permits) and to allow them to resume once the stock market has retained its usual conditions.

(It is said that such measures were taken in Karachi and Culcutta stock markets as well)

Such measures have said to help weak stockbroking companies to overcome an unbalanced balance sheet and while retaining their permits.

In 2010, a stock market growth of 96% was seen while a growth of 100% was seen in 2011.

malinda,can you please reveal the names of those brokering firms for the benefit of our members?

it's quite possible , turnover is minimal and the index is going nowhere ... nor you can hope for a change soon, as the market is horribly manipulated (biggest stock like Ceylon Tobacco quote a laughable multiple of their book value, clearly supported by someone who put them at guarantee and is unable to pay the debt back or to sell them at current inflated price).
So as you can't expect anything good from the stock market the only solution is to develop a real secondary debentures market allowing also the small fishes to play and competing with fixed deposits. But it seems that the only brokers having a debenture trade license are First Capital and JB Securities  

malinda,can you please reveal the names of those brokering firms for the benefit of our members?

@Gaudente wrote:it's quite possible , turnover is minimal and the index is going nowhere ... nor you can hope for a change soon, as the market is horribly manipulated (biggest stock like Ceylon Tobacco quote a laughable multiple of their book value, clearly supported by someone who put them at guarantee and is unable to pay the debt back or to sell them at current inflated price).
So as you can't expect anything good from the stock market the only solution is to develop a real secondary debentures market allowing also the small fishes to play and competing with fixed deposits. But it seems that the only brokers having a debenture trade license are First Capital and JB Securities  

Your view is somewhat correct.Above scenario of broker firms crashing will never happen.Right now market and most shares are manipulated down.We had bigger concerns earlier but market stood up and gave profits.It will happen again and it's not far away.

So we all are in hot water. advisers, investors, traders no difference.      

I think some one who knows the names should come with such broker firms in trouble. We must be able to call a spade a spade. That culture should be developed in this kind of web forums as that is not available in print media.
Naming and Shaming is one nice way of disciplining a whole industry. i wonder why SEC is not doing that.

"KUMBALA MASHI KEWANAM DUKA VIDAPAN BLALO"
(Muslim Trader in Rural Sri lanka)
This is famous saying among rural people

Brokers are compelled to suffer for their misconduct in SL Stock market

https://www.srilankamirror.com/news/12266-8-stockbroking-firms-in-crisis

8 stockbroking firms in crisis
Published on Wednesday, 11 December 2013 09:33
Certain stockbroking firms in the Colombo are facing a capital crisis, reports say.

According to sources, at least 08 out of the 29 active stockbroking firms are facing a critical capital crisis.

Speaking to media, stockbrokers, regulators as well as investors have complained that chiefs of certain companies are shifting towards unethical practices, even violating stock market regulations, in a bid to recover their marginal lendings.

According to reports, the crisis ridden firms are even unable to meet the minimum capital limit. (The minimum capital limit for a stockbroking firm is Rs. 35 million.)

The crisis has occured in a backdrop of low turnover conditions in the stock market, it is said.

Meanwhile, it is revealed that a certain group of stockbrokers are prepared to request the Securities and Exchange Commission of Sri Lanka (SEC) to allow them to cease operations (without cancelling permits) and to allow them to resume once the stock market has retained its usual conditions.

(It is said that such measures were taken in Karachi and Culcutta stock markets as well)

Such measures have said to help weak stockbroking companies to overcome an unbalanced balance sheet and while retaining their permits.

In 2010, a stock market growth of 96% was seen while a growth of 100% was seen in 2011.
(Source : deleted)





"Certain stockbroking firms in the Colombo are facing a capital crisis, reports say.

According to sources, at least 08 out of the 29 active stockbroking firms are facing a critical capital crisis."

The reason would probably be that these brokers have not forced sold in order to get the interest money, and now the clients are wiped out completely and the accounts have minus cash balance.


"Such measures have said to help weak stockbroking companies to overcome an unbalanced balance sheet and while retaining their permits."

Overcome an Unbalanced balance sheet...?       

UNBALANCED BALANCESHEET     

I sense there is some real sugarcoated pure shit which is yet to be uncovered to common people.

Is the disclosure of such broker companies shielded by legal issues? If not, please bring into light for the benefit of new comers, existing investors & public.

"Unbalanced Balance sheet" should be the unrecoverable credit given to now wiped out clients...

How much credit is known only to the privileged few for now..

Which broker firms issued most credit during the boom..?? Make your guess..

2009 manipulation සමයේ සිට හතු පිපෙන්න වගෙ ආපු stockbroking කම්පැනි දැන් වැහෙනවා කියන එක අරුමයක් නෙමේ


කුම්බලා මාලු කෑවනම් විදවපන් බලලෝ  

So these broker firms requesting to keep their "unbalanced balance sheet" under wraps until the next batch of newcomers come.

Interestingly lots of these broker firms have their own "investment arm" which have accumulated amazing wealth. (Not to mention proxy accounts of owners)

So have they accumulated this wealth at the expense of the wiped out clients, who have bought some of their recommended shares..??
Anyway isn't there a conflict of interest giving buy recommendations, whilst having your own shares, which u can sell at unusually high prices..??

@gamaya wrote:So these broker firms requesting to keep their "unbalanced balance sheet" under wraps until the next batch of newcomers come.

Interestingly lots of these broker firms have their own "investment arm" which have accumulated amazing wealth. (Not to mention proxy accounts of owners)

So have they accumulated this wealth at the expense of the wiped out clients, who have bought some of their recommended shares..??
Anyway isn't there a conflict of interest giving buy recommendations, whilst having your own shares, which u can sell at unusually high prices..??

That about sums it up me thinks.   

@stockmania wrote:2009 manipulation සමයේ සිට හතු පිපෙන්න වගෙ ආපු stockbroking කම්පැනි දැන් වැහෙනවා කියන එක අරුමයක් නෙමේ


කුම්බලා මාලු කෑවනම් විදවපන් බලලෝ  

Could you pls name them for the benefit of our members

My inquiries reveal that almost all market participants face the issue of inability to meet expenditure with the inadequate income they get these days.

However, those who get support from the parent companies can survive and others lobby for increase of fees to meet their ends.

We should strongly resist this lobby for increase of fees because; (a) already fees charged at the CSE is higher than that of other countries, (b) the services provided by them at present are totally inadquate for the fees charged (infact, they should reduce the fees for online clients), (c) inefficiency should not be encouraged at any cost  and also (d) our CSE is so small & not capable of feeding this much of market participants.

What the SEC should do is to encourage them to merge with stronger participants who have parental support.

One day in future we will finally discover the consequences of "unbalanced balance sheet"

Until then the brokers and SEC would continue their "ethical best practices"

what is stopping them from selling the company to someone with deeper pockets ?