SEC boss Tilak to chair first commissioners meeting today; decision on broker moves eyed

Tuesday, 20 December 2011 00:46 - - {{hitsCtrl.values.hits}}

The newly-appointed SEC Chairman Tilak Karunaratne will chair his first meeting with commissioners today.

Speculation was rife that commissioners could make their final decision on the price band and broker credit, in addition to discussing the applicants for the post of Director General. Brokers during the last days of former SEC Chief Indrani Sugathadasa as well as to President Mahinda Rajapaksa had recommended the lifting of the contentious price band and introduction of circuit breakers and 2 or 3 times net capital broker lending for greater investor confidence and better market.

The year-to-date performance of the Colombo stock market has worsened with negative return now close to 12% on the basis of ASI (25% from 2011’s all-time high) and nearly 28% (30% from 2011’s all time high) in terms of MPI. Since the appointment of Karunaratne, the market hadn’t turned for the better either with over Rs. 50 billion in value lost since 8 December.

The price band of 10% for 15 market days was first introduced in September last year, but was subsequently softened to 10% spanning five market days.

Given the lack of overall confidence and continued misery of the market, some analysts were cynical, opining that the lifting of price band at present would not be a great boost. They pointed to the market’s negative performance yesterday despite the relaxation of Central Bank rule on margin limits on commercial banks.