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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » What is credit clearance?????

What is credit clearance?????

Go down  Message [Page 1 of 1]

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

micky

micky
Manager - Equity Analytics
Manager - Equity Analytics
what is credit clearence??

hope lots of people like to know about this.

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

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
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..

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

micky

micky
Manager - Equity Analytics
Manager - Equity Analytics
thanx alot, lots of technical terms, need to do a research for it.

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

kiri

kiri
Manager - Equity Analytics
Manager - Equity Analytics
@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.

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

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
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.

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

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@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

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

micky

micky
Manager - Equity Analytics
Manager - Equity Analytics
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.

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

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@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

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

micky

micky
Manager - Equity Analytics
Manager - Equity Analytics
@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.

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

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@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

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

kiri

kiri
Manager - Equity Analytics
Manager - Equity Analytics
Thanks Gaja and Smallville.

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

micky

micky
Manager - Equity Analytics
Manager - Equity Analytics
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

13What is credit clearance????? Empty More Info on Credit Clearance. Mon Feb 21, 2011 9:55 pm

milanka

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

http://forum.srilankaequity.com/u188

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

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@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. Evil or Very Mad

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

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

ShareShares


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

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

a_randy

a_randy
Manager - Equity Analytics
Manager - Equity Analytics
How much is the broker interest?

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

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Great info thanks..

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

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics
June credit clearance may be over,........ Very Happy what ever left may have been cleared now. ...

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