rule which has caused forced selling in the market, resulting in many
local individual investors with less than Rs.1 million portfolios to
exit and look for alternative investments.
Furthermore, Colombo Stock Brokers Association in a letter to the SEC
pointed out that from January first to end of July, there had been a net
foreign outflow of Rs.34.6 billion and IPOs (Initial Public Offers) and
rights issues have absorbed over Rs.50 billion in the market.
According to brokers, since brokers have been barred to provide margins
for their clients, the share prices have been plunging, which they
attribute to forced- selling.
“Each market day has become a T+5 forced selling day for all Stock
Broking firms which has led to a large number of clients’ shares been
forced to sell daily on to the buying quotations, which in turn is
moving lower and lower, and thereby precipitating a continues drop in
the market prices,” the letter noted. As a remedy, the brokers requested
the SEC to allow them to provide credit to clients at least up to their