Stockbrokers close outstation branches
Some stockbrokers, with the stock market continuing to show negative returns, are closing their outstation branches in a move to cut costs and manage their bottom lines.
While brokerages are faced with several serious issues and their cash-flows are strapped, some companies are mulling pay cuts as well. Some closed nearly four branches outstation, they told the Business times adding that altogether about 12 branches were closed by March. The Securities $ Exchange Commission (SEC)’s new rules in capital adequacy which direct the implementation of a risk based Capital Adequacy Requirement (CAR) of 1.2 times the risk requirement of stock brokers subject to a minimum liquid capital requirement of Rs. 35 million is also curtailing operations, they said.
These firms had met with both the Colombo Stock Exchange (CSE) and the SEC and requested for ‘assistance’, they said.
Officials of both institutions confirmed this saying that some firms had approached them in March for assistance but they had not specified ‘what’. CSE officials said that since April, the CSE has showed buoyancy and the stockbrokers haven’t come back to them on closing branches.
They said that some run their branches on CSE premises which are subsidised by the CSE. “Branches at Matara, Kandy, Kurunegala, Negombo and Jaffna are highly subsidised. They pay a minimal rent only and no utilities,” a CSE official said, adding that now with retailers rejoining the CSE things may change for the better.