Sri Lanka securities regulator to allow short selling in equity markets

Vajira-Wijegunawardene

June 16, 2015 (LBO) – Sri Lanka’s securities watchdog, the Securities and Exchange Commission says it is currently looking at the regulatory frame work to allow short selling in the equity markets.

“We are thinking of short selling for the equity market with certain guild lines.” Director General of the Securities and Exchange Commission, Vajira Wijegunawardene said.

He emphasized the need to have a strong mechanism to allow short selling especially in the equity markets.

“With equities obviously you are not going to allow any stock to be short sold. It has to be certain liquidity criteria and other requirements,”

“That will happen along with buy in board with the Central Counter Party implementation.” Wijegunawardene added.

He was speaking at the 63rd LBR LBO CEO forum held recently in Colombo.

The Automated Trading System at the Colombo Stock Exchange is currently coupled with the Central Depository Systems blocking short selling of securities.

“With the new initiatives it’s going to be decoupled which means people will be able to sell securities that they do not have,”

“Right now we are working on the policies to enable short selling.” Wijegunawardene said.

He further stated that the unlisted bond market in the country will also get streamlined through the regulator intervention.

“There is an unlisted bond market as well. So with the amendment to our SEC act that market would also come under the purview of SEC,”

“We have also allowed foreigners to invest in corporate bonds which were not allowed earlier.” Wijegunawardene further stated.

63-LBO_forum

63rd LBR LBO CEO forum

 

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Dr Mawella Prematilleke - Fiji
Dr Mawella Prematilleke - Fiji
7 years ago

Short Selling is selling securities, that does not own by the seller. Short seller expects price to fall, so that the short sale can subsequently bought in at a profit. Normally the short seller will borrow the asset, the delivery can be made at the agreed date. When parties omits to do so, the practice is known as ” naked short selling”. Since 2008 after Banking melt down, countries including US have placed irrevocable restrictions on short selling and naked short selling

sacre blieu
sacre blieu
7 years ago

They should be careful with this issue and be very strict in its disciplines and have a clause that the SEC will have the last word in the interpretation and action and subsequent prosecution. Of course the follow up by-laws and conditions should be pinpoint accuracy in its interpretation and sound ,and the opinion of the supreme court should be sought prior to gazetting.

Ronnie
Ronnie
7 years ago

The CSE is not ready for short selling.

The SEC and its employees are way out of thier league never having been intimately involved in the transactional side of the markets.

Another terrible set of appointments by RW the worst being the Chairman.

The ONLY person who is taken seriously outside of Sri Lanka is Arjuna Mahendran.