May 22, 2012 (LBO) – Sri Lanka’s securities watchdog has tightened short term trading by workers and directors of broking firms and also passed strictures on future trading by a state bank, following a controversial stock purchase on which payment was stopped. SEC said market intermediaries will not be allowed to engage in trade below six months, crossing will be limited to 20 percent above market price and state-run National Savings Bank will have to present a board resolution before placing large purchase orders.
The rules come in the wake of sale of stock to NSB at 60 percent above market price on which payment was stopped after a controversy erupted.
SEC said enforcement will also be tightened.
The full statement is reproduced below
SEC Takes Interim Measures to Mitigate Settlement Risk
At the 301st Commission Meeting of the Securities and Exchange Commission of Sri Lanka (SEC) held today (22nd May 2012), the Commission deliberated at length the transaction of The Finance PLC shares by National Savings Bank (NSB) through the stockbroker firm Taprobane Securities (Pvt) Ltd.
In the aftermath of this transaction, the Commission explored the ways and means of enhancing the smooth functioning of the payment and settl