Reversing NSB-TFC deal

By Sunil

18 May 2012 12:11 pm - 5 - {{hitsCtrl.values.hits}}

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The Securities and Exchange Commission (SEC) has granted approval to transfer The Finance shares to the seller outside the trading system of the stock exchange, the SEC said in a statement.

The full statment issued by the SEC:

Transfer of The Finance Company PLC shares purchased by the National Savings Bank through the Colombo Stock Exchange

Taprobane Securities (Pvt) Ltd (TSL) and the National Savings Bank (NSB) by letters dated 11th May 2012 made an application to the Securities and Exchange Commission of Sri Lanka (SEC) seeking prior approval under Section 28 (1) of the SEC Act to transfer The Finance Company PLC (TFC) shares purchased by NSB on 27th April 2012 on the Colombo Stock Exchange (CSE) to persons identified by TSL outside the Trading Floor of the CSE.

TSL in their application undertook to pay Sampath Bank PLC the consideration due on this transaction including the interest due thereon in settlement of the monies due to Sampath Bank for the settlement services rendered by Sampath Bank on the share purchases done by NSB of TFC on the Trading Floor of the CSE on 27th April 2012.

NSB in their application also agreed to transfer TFC shares purchased on 27th April 2012 in its entirety to the persons identified by TSL outside the Trading Floor of the CSE. The NSB agreed to allow TSL to pay Sampath Bank the consideration sum due on this share transfer in satisfaction of the amounts due to Sampath Bank for the settlement services rendered on the share purchases transacted by them on the CSE on 27th April 2012.

Sampath Bank too intimated to SEC that the bank will discharge NSB and all parties connected with the impugned transaction, if TSL as undertaken by its letter pays Sampath Bank all sums due to them including interest/levies due thereon.

In terms of Section 28 (1), the SEC has the discretionary power to approve transfers outside the trading procedure of the CSE.

In this backdrop the SEC has granted approval to allow NSB to transfer TFC shares purchased on 27th April 2012 in its entirety to the persons identified by TSL outside the Trading Floor of the CSE. This approval has been granted under exceptional circumstances for the smooth functioning and the system stability of the payment and settlement cycle of the Capital Market of Sri Lanka. It is stressed that the SEC will not consider this instance of granting approval to conduct a trade of this nature off the Floor of the CSE as creating a precedence.

The SEC is separately investigating the above mentioned transaction and the parties involved in it. Firm action will be taken against all those who are found to have violated the SEC Act.

The SEC is currently studying this entire issue and expects to take a series of appropriate measures, rule and procedure changes to prevent such incidents in the future. The SEC will also intensify its efforts in implementing the Central Counter Party (CCP) for the CSE which will be the final solution to address settlement failure risk.

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Comments - 5

Yehiya Friday, 18 May 2012 12:19 PM

First buttet to coruption.

j Friday, 18 May 2012 12:30 PM

To the best of my knowledge there are no provisions to revert back the trade after 2nd day.

Kondeybendapucheena Friday, 18 May 2012 03:56 PM

What will happen to Deal Makers

chris Saturday, 19 May 2012 01:06 AM

Bye Bye foriegn invenstors

Nodrog Sunday, 20 May 2012 01:59 AM

Perhaps we should re-name it the Laughing-stock market?

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Reversing NSB-TFC deal

Comments - 5

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