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SEC relaxes rules on credit, broker trading
9 October 2012 03:24 am - 0 - {{hitsCtrl.values.hits}}
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The Securities and Exchange Commission (SEC) yesterday decided to significantly relax rules on broker credit and restrictions on short-term trading by directors and workers of stockbroking companies.According to a press statement issued by the SEC, during the 306th Commission Meeting held yesterday, it was decided to amend the net capital computation in order to relax the credit granted by stockbroking firms to their clients.
“In that the stockbrokers are now permitted to extend credit to their clients three times the adjusted net capital (i.e. net capital minus 50% of fixed assets) without having to deduct outstanding debtors from net capital,” the SEC said in its statement.
However, the stockbrokers are required to compute the net capital adjusting all unsettled purchase transactions (over T+3) to reflect the excess of cost over market value.
Further, the SEC stressed that brokers are required to ensure strict compliance with all rules and regulations applicable for extension of credit.
Meanwhile, the new SEC Commission, now headed by Dr. Nalaka Godahewa has decided to undo some of the regulations brought in during the immediate past Chairman, Tilak Karunaratne.
According to the SEC statement, the 20 percent upper limit on the crossings that was brought in by Karunaratne, prompted by the controversial NSB-TFC deal that was reversed later, has been removed with effect from today.
Also, the SEC has decided to lift the restrictions imposed on dealings by directors and owners of stock brokerages, which had also been prompted by the NSB-TFC deal.
Thus, the SEC has lifted the restriction imposed on executive directors, employees, their spouses and their nominees of all licenced stockbrokers and stock dealers from selling listed shares purchased from the secondary market for a period of six months from the date of purchase.
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