Business Times

SEC mulls removing price bands, reinstating circuit breakers

The Securities and Exchange Commission (SEC), more than a year after imposing the controversial price bands, is exploring the possibility of removing it and reintroducing circuit breakers, sources close to the SEC said.

“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 which are being considered, but nothing has been finalized,” one source told the Business Times.

The 10% price curb was imposed by the regulators on August 5 last year, disallowing shares to go up or down by more than 10% in price amidst opposition by many traders. “When a share appreciates there needs to be sufficient cause (for it to do so),” he said, adding that attributing sheer (high) investor sentiment to a ‘crazy’ rise in fundamentally weak stocks reflects negatively on the market.

Market wide index- based circuit breakers (which were in effect some time ago) are imposed by stock exchanges to halt trading of equity securities in order to provide a ‘cooling off’ period when there is an unusual movement in the index. The SEC is considering this," the source added.

Analysts say that while the concept of imposing price limits only on highly manipulated shares are good, the way in which the formula itself is hidden by the regulators is very unhealthy and not transparent. One analyst said that the unilateral imposition of price bands was not necessarily in the best interest of the market since it penalised all companies irrespective of whether there were genuine reason for significant price changes or not. “A more targeted approach has greater merit although it will be a challenge in defining suitable criteria,” he added, saying that circuit breakers will be an answer.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
100% land sale tax for foreigners to be scrapped
Cargills to look at winery, expand beer capacity
George Steuart eyed by many before Dilith-Nimal deal
SEC mulls removing price bands, reinstating circuit breakers
Senok Group enters heli-tourism
Uncertainty looms over Chalmers Granary site
Now, more than ever before, the world needs creativity
Long-serving directors of banks
SEC takes matters to heart, advises investors on stocks
GSK brings relief to Allergic Rhinitis patients in Sri Lanka
Fire risks
TRC regulating over the limit
Legal tangle looms over Chalmers Granary project
Employers’ Federation suggests the government to regulate work place relations
EU supports housing in Vavuniya
‘Seylan Smart Lease’ gives leasing a new dimension
Pros and cons of moving to Hambantota
Ceylon Oxygen awarded exclusive contract in KKS Harbour project
Chevron Lubricants President impressed with Sri Lankan post-war growth
TOYP Recognizes Carbon Footprinting Pioneer
Sierra completes successful 30 years
Re-emergence of political risk scares investors:Foreign expert
RAM maintains Associated Motor Finance ratings
Exchange Traded Funds by year end
Samaposha gets SLS certification
Nihal releases latest book on “UN Convention against Corruption”, also launches Online Books Store
Shaw Wallace improves distribution network with sales force automation
Taprobane Travel celebrates 32-year partnership with SriLankan Airlines
Some of Sri Lanka’s poor are ‘ashamed to be poor’
Women to the fore in the construction sector in the East
JKF, HelpAge, and eye-support group hold eye camp in Padaviya
Asia Capital's AAI exit primary due to new insurance regulations: Chairman
Sri Lankan homes to generate room capacity for tourism industry
South Asia’s biggest construction fair in Colombo next year
Indices and turnover fall; anxiety over tough action against brokers
SIA adds Jakarta to its freighter network


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 1996 - 2011 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved | Site best viewed in IE ver 8.0 @ 1024 x 768 resolution