CSE drama: Who cooked the system?
The Colombo Stock Exchange (CSE) is reassessing its risk management processes and procedures, while the capital market regulator is flexing for a series of probes, after some stockbrokers managed to game the trading system and falsify transactions last week.
Meanwhile the Securities and Exchange Commission (SEC) is probing to find out whether this was deliberate sabotage.
On January 7, trading was reduced to just 23 minutes, as WealthTrust Securities executed pre-opening trades of 6 million shares at an inflated price of Rs. 25,000, yielding a turnover of Rs. 163 billion. This event raised concerns over market vulnerabilities, with explanations ranging from “human error” to deliberate market manipulation. An official statement by the SEC said that the said stockbrokers have misused the system.
Officials assured that the CSE surveillance system is intact. “There is nothing wrong with that system. The CSE has compiled a comprehensive report on this, which intends to scrutinise all the risk management practises and procedures. A special board-level committee was also appointed by the CSE board to probe this,” an official told the Sunday Times Business.
After scrutinising the CSE report, the SEC will initiate a further round of investigations. An informed source said that the regulators are trying to determine whether it was sabotage, as there is a strong possibility that it may be so. Having inquired from several stockbrokers about the investigations by both the CSE and SEC, it was determined that the actions on that day were deliberate. Now, both entities are trying to verify whether it was sabotage.
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