What is credit clearance?????

micky · 1 What is credit clearance????? Mon Feb 21, 2011 6:52 pm

micky

Manager - Equity Analytics

Posts : 230
Equity Stars : 3966
Reputation : 18
Join date : 2011-02-04

what is credit clearence??

hope lots of people like to know about this.

smallville · 2 Re: What is credit clearance????? Mon Feb 21, 2011 7:49 pm

smallville

Associate Director - Equity Analytics

Posts : 4119
Equity Stars : 8939
Reputation : 530
Join date : 2011-02-03
Location : Back on Earth

This came as a SEC directive to clear 50% of debts by March 31 and the rest by June 30th..

In line with this directive, brokers will stick to T+3 rule in future.. SEC has also issued another directive for brokers encouragin force selling if debts are not cleared by T+5 and its in practise now..

micky · 3 Re: What is credit clearance????? Mon Feb 21, 2011 7:52 pm

micky

Manager - Equity Analytics

Posts : 230
Equity Stars : 3966
Reputation : 18
Join date : 2011-02-04

thanx alot, lots of technical terms, need to do a research for it.

kiri · 4 Re: What is credit clearance????? Mon Feb 21, 2011 8:18 pm

kiri

Manager - Equity Analytics

Posts : 140
Equity Stars : 3855
Reputation : 15
Join date : 2011-02-05

@micky wrote:thanx alot, lots of technical terms, need to do a research for it.

yes. if someone can explain that. because we can't understand that technical words. thanks.

smallville · 5 Re: What is credit clearance????? Mon Feb 21, 2011 8:52 pm

smallville

Associate Director - Equity Analytics

Posts : 4119
Equity Stars : 8939
Reputation : 530
Join date : 2011-02-03
Location : Back on Earth

Normally, when you buy/sell a share you're given 3 days from the date you purchased it to settle the balance.
T+3 = Trading day + 3 days to settle the balance
T+5 = Trading day + 5 days to settle the balance

If you exceed these days, brokers could apply an interest on the outstanding balance. When ppl take more time to settle the credit, brokers are compelled to do force selling to settle it.. So it was the practice for some time. Now with the new directives by SEC (Security Exchange Comm.), T+3 should be strickly followed.. And all the balance you already owe to broker should be settled by June 30th which 50% of it has to be completed by March 31st.

Gaja · 6 Re: What is credit clearance????? Mon Feb 21, 2011 8:54 pm

Gaja

Associate Director - Equity Analytics

Posts : 3127
Equity Stars : 8514
Reputation : 260
Join date : 2011-01-27
Age : 37
Location : Colombo

@smallville wrote:This came as a SEC directive to clear 50% of debts by March 31 and the rest by June 30th..

In line with this directive, brokers will stick to T+3 rule in future.. SEC has also issued another directive for brokers encouragin force selling if debts are not cleared by T+5 and its in practise now..

Prior to 31.12.2010 investors was allowed to buy on credit, and they had to settle with in four days including the purchasing day ( T + 3 ), if you didn't sell with in four days broker has the right to dispose the shares held by you and he can recover his dues.

However if the broker desired without selling in for Days he may allow you to hold the shares until you wanted to hold, but on the due amount he used to charge the penal interest.

From the 01.01.2011 the Sec / Cse told brokers if the client failed within 6 days ( T + 5 ), you have to dispose the shares immediately ( in other words you can't get credit from the brokers. If the broker want to give the credit he must get the permission from the regulators and can give credit by way of Margin Facility. Also note that if the broker wishes he can dispose the shares at the end of 4th day without waiting for the 6th day.

Now i say i bought shares worth of 1,500,000/= on 31.12.2010 and to date i didn't settle this to date. Self and broker agreed for the penal interest and they used to charge that.

But as at 31.03.2011 whether we like it or not i have to settle Rs. 750,000/= and the balance has to be settle on or before 30.06.2011.

Hope this may be useful to somebody, and excuse me if there is any errors.

Also if you need further clarification i will be happy to help you

micky · 7 Re: What is credit clearance????? Mon Feb 21, 2011 9:01 pm

micky

Manager - Equity Analytics

Posts : 230
Equity Stars : 3966
Reputation : 18
Join date : 2011-02-04

thanx experts now can understand,

how it affect to market?

poor people need to sell and rich people can buy??

in other words most of the retailers will sell and big investors will buy? so price will go down?

am i correct? need to add more??

if wrong please correct me.

Gaja · 8 Re: What is credit clearance????? Mon Feb 21, 2011 9:03 pm

Gaja

Associate Director - Equity Analytics

Posts : 3127
Equity Stars : 8514
Reputation : 260
Join date : 2011-01-27
Age : 37
Location : Colombo

@micky wrote:thanx experts now can understand,

how it affect to market?

poor people need to sell and rich people can buy??

in other words most of the retailers will sell and big investors will buy? so price will go down?

am i correct? need to add more??

if wrong please correct me.

For this only i always told not to buy on credit and not to buy without buying why you buy

micky · 9 Re: What is credit clearance????? Mon Feb 21, 2011 9:06 pm

micky

Manager - Equity Analytics

Posts : 230
Equity Stars : 3966
Reputation : 18
Join date : 2011-02-04

@Gaja wrote:

@micky wrote:thanx experts now can understand,

how it affect to market?

poor people need to sell and rich people can buy??

in other words most of the retailers will sell and big investors will buy? so price will go down?

am i correct? need to add more??

if wrong please correct me.

For this only i always told not to buy on credit and not to buy without buying why you buy

thats mean i am correct?

how it affect the market??? there should be more than 1 way.

Gaja · 10 Re: What is credit clearance????? Mon Feb 21, 2011 9:15 pm

Gaja

Associate Director - Equity Analytics

Posts : 3127
Equity Stars : 8514
Reputation : 260
Join date : 2011-01-27
Age : 37
Location : Colombo

@micky wrote:

@Gaja wrote:

@micky wrote:thanx experts now can understand,

how it affect to market?

poor people need to sell and rich people can buy??

in other words most of the retailers will sell and big investors will buy? so price will go down?

am i correct? need to add more??

if wrong please correct me.

For this only i always told not to buy on credit and not to buy without buying why you buy

thats mean i am correct?

how it affect the market??? there should be more than 1 way.

Yes indeed, it effect more than one way

Near to 31.03.2011 persons with the holding power may enter the market and wait for the force selling, because you like it or not you have dispose half, so sometimes even very valuable shares might become very cheap.

If the investor lost big money he might afraid to come to the market again, even some of my friends stop share trading at the end of December, this active participation will come down

If the market values started to come down even the person who bought the shares through margin account or a person who pledge shares as security for borrowing also might face lot of issues

kiri · 11 Re: What is credit clearance????? Mon Feb 21, 2011 9:20 pm

kiri

Manager - Equity Analytics

Posts : 140
Equity Stars : 3855
Reputation : 15
Join date : 2011-02-05

Thanks Gaja and Smallville.

micky · 12 Re: What is credit clearance????? Mon Feb 21, 2011 9:29 pm

micky

Manager - Equity Analytics

Posts : 230
Equity Stars : 3966
Reputation : 18
Join date : 2011-02-04

thanx experts,

so this rule discourage baby investors??

i think CSE trying to promote cse alot,

today i got to know about this,

omg i also have credit, i thought my broker is very kind to give me credits, they charge interests right?

again problem with brokers, they do not disclose these rules. they ask us to invest, then they provide online platform, thats all. Evil or Very Mad

milanka · 13 More Info on Credit Clearance. Mon Feb 21, 2011 9:55 pm

milanka

Vice President - Equity Analytics

Posts : 1102
Equity Stars : 5685
Reputation : 164
Join date : 2011-01-28
Location : Q Soft.

http://forum.srilankaequity.com/t730-market-responce-to-credit-clearance-50-by-march-2011?highlight=credit

smallville · 14 Re: What is credit clearance????? Tue Feb 22, 2011 9:13 am

smallville

Associate Director - Equity Analytics

Posts : 4119
Equity Stars : 8939
Reputation : 530
Join date : 2011-02-03
Location : Back on Earth

@micky wrote:thanx experts,

so this rule discourage baby investors??

i think CSE trying to promote cse alot,

today i got to know about this,

omg i also have credit, i thought my broker is very kind to give me credits, they charge interests right?

again problem with brokers, they do not disclose these rules. they ask us to invest, then they provide online platform, thats all.

To be honest with u gotta be vigilant of whats happening around the market.. news, announcements need to be always checked and be updated..
As Gaja said, always be mindful how u use your margin, if possible, avoid using margin till ur seasoned.. so u'll be safe with traps

ShareShares · 15 Re: What is credit clearance????? Wed May 04, 2011 5:36 am

ShareShares

Assistant Vice President - Equity Analytics

Posts : 679
Equity Stars : 4511
Reputation : 152
Join date : 2011-02-02

Investors and investments need to be attracted. Blanket measures covering all investments and fixed dates for all can discourage investors not having any credit issues as well. Need to encourage foreigners as well. Everyday clearing is going on, where ever these issues are there , that can be addressed without affecting overall investor confidence. Then the foreigners also return.

a_randy · 16 Re: What is credit clearance????? Tue Jul 19, 2011 12:58 pm

a_randy

Manager - Equity Analytics

Posts : 162
Equity Stars : 3762
Reputation : 7
Join date : 2011-06-07

How much is the broker interest?

JennyFunny · 17 Re: What is credit clearance????? Tue Jul 19, 2011 3:16 pm

JennyFunny

Senior Manager - Equity Analytics

Posts : 452
Equity Stars : 4078
Reputation : 12
Join date : 2011-05-20
Age : 29
Location : Colombo

Great info thanks..

Aamiable · 18 Re: What is credit clearance????? Tue Jul 19, 2011 9:03 pm

Aamiable

Vice President - Equity Analytics

Posts : 1284
Equity Stars : 5119
Reputation : 176
Join date : 2011-02-21

June credit clearance may be over,........ Very Happy

what ever left may have been cleared now. ...

Sponsored content

Latest topics

What is credit clearance?????

1 What is credit clearance????? Mon Feb 21, 2011 6:52 pm

micky

2 Re: What is credit clearance????? Mon Feb 21, 2011 7:49 pm

smallville

3 Re: What is credit clearance????? Mon Feb 21, 2011 7:52 pm

micky

4 Re: What is credit clearance????? Mon Feb 21, 2011 8:18 pm

kiri

5 Re: What is credit clearance????? Mon Feb 21, 2011 8:52 pm

smallville

6 Re: What is credit clearance????? Mon Feb 21, 2011 8:54 pm

Gaja

7 Re: What is credit clearance????? Mon Feb 21, 2011 9:01 pm

micky

8 Re: What is credit clearance????? Mon Feb 21, 2011 9:03 pm

Gaja

9 Re: What is credit clearance????? Mon Feb 21, 2011 9:06 pm

micky

10 Re: What is credit clearance????? Mon Feb 21, 2011 9:15 pm

Gaja

11 Re: What is credit clearance????? Mon Feb 21, 2011 9:20 pm

kiri

12 Re: What is credit clearance????? Mon Feb 21, 2011 9:29 pm

micky

13 More Info on Credit Clearance. Mon Feb 21, 2011 9:55 pm

milanka

14 Re: What is credit clearance????? Tue Feb 22, 2011 9:13 am

smallville

15 Re: What is credit clearance????? Wed May 04, 2011 5:36 am

ShareShares

16 Re: What is credit clearance????? Tue Jul 19, 2011 12:58 pm

a_randy

17 Re: What is credit clearance????? Tue Jul 19, 2011 3:16 pm

JennyFunny

18 Re: What is credit clearance????? Tue Jul 19, 2011 9:03 pm

Aamiable

19 Re: What is credit clearance?????

Sponsored content