The Securities and Exchange Commission (SEC) may re-visit the price band directive, which they issued in October last year as the share market dynamics have now changed since the start of 2011, SEC sources say.
“The whole context in which shares trade (now) has changed with stockbrokers being prohibited to grant credit to investors, margin lending facility coming in, etc. So the SEC has pondered some changes to the price band and we may change it, but nothing has been finalized,” a SEC source told the Business Times.
He reiterated that in this (fresh) market context, the SEC is aware that it has to make some changes, but the final consensus has not been received as yet by the commission.
Since its inception, the first to enter the band was finance company Vallibal Finance followed by Lake House Printers. Bogala Graphite, Metropolitan, East West, Coco Lanka, Colombo Land (warrants), Ceylon Tea Brokers and Muller and Phipps followed suit into the price curb along with a host of others, while PC House, a new kid on the block, saw it being admitted into the dreaded band on Thursday.
Despite many representations from the stockbrokering community in the past months, the regulator didn’t relax its stance pertaining to the price curbs. An analyst noted that ‘Laissez faire’ (leaving the markets free from state or any other interference) is a cornerstone principle of free market economics. “The more you interfere the more distorted the markets will be.
No prudent investor would want to come and invest in a distorted and warped market. Market is always right. Leave the market free from outside interference and it is capable of self regulating and coming to a stable equilibrium state,” he added.
But the SEC said that the price bands were considered for some time and when it was verified that some investors were pushing some shares, the regulators had to step in.