What is the truth behind these rumors?

nkalansu · 1 What is the truth behind these rumors? Fri Jul 29, 2011 9:23 pm

nkalansu

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Can anybody tell us about the truth behind the rumors of SEC easing credit restrictions?
T+5? T+15?...etc...
Why these people are buying? I am sure these retailers are not doing it for cash....

windi5 · 2 Re: What is the truth behind these rumors? Fri Jul 29, 2011 9:37 pm

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Only god knows. Something going on,any way its good for poor investors who suffered due to bearish mkt prevailed last few weeks. Now everyone seems to be happy,nobody scold CSE. Very Happy

udul · 3 T+ 5 rule appeal Sat Jul 30, 2011 7:39 am

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By Hiran H.Senewiratne

Stock brokers are now appealing to the Securities and Exchange Commission (SEC) to remove or review the T+5 Rule or five days deadline and the SEC has so far not given any response following repeated appeals from brokers and investors, stock market sources said.

"At present stock brokering firms have to go through difficult tasks due to forced –selling of more than 1000 client or a day because of the T + 5 Rule of the Securities and Exchange Commission (SEC)," leading stock brokering firm said.

However, when the Island Financial Review attempted to get SEC’s view on the matter there were no authorised persons to comment on the topic, its sources said.

The SEC is considering the removal of the five days deadline or T+5 Rule in the future with the constant request from stockbrokers and other investors to the SEC, official attached to Lanka Securities Ltd sources told The Business Review .

On 29 December 2010 the SEC issued a directive which mandated r stock brokering companies to force-sell by the T+ 5 ( transactions plus five days) , securities of buyers, which are in default of settlement by the T+3 Rule.

Therefore, from 7 January 2011 each market day became a T +5 force- selling day, which put every stock brokering company and local investors through a difficult situation whether the market goes up or down, stock brokers said.

With this new rule individual investors are going be affected with this rule because if one passes the five days dead line his/her shares will come under forced sell. This really put individual investors who do business in the Colombo Stock Market under tremendous pressure

A large number of local individual investors have increased significantly, which accounted for 44 per cent of the total stock market turnover, while foreign institutional buyers account only for15 percent of the total market turnover

windi5 · 4 Re: What is the truth behind these rumors? Sat Jul 30, 2011 10:16 am

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I dont think there will be any change to that T-5 limit. SEC, might extend the time to clear the remaining credits. Shocked

Gainer · 5 Re: What is the truth behind these rumors? Sat Jul 30, 2011 10:44 am

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SEC if do not remove t+5 rule market will come down again.

Namalaka · 6 Re: What is the truth behind these rumors? Sat Jul 30, 2011 10:57 am

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We have to focus specially on later part of next week to identify the effect of this T+5 (if no changes to it).

Investor99 · 7 Re: What is the truth behind these rumors? Sat Jul 30, 2011 12:00 pm

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I don’t think SEC will remove the T+5 rule. This rule (T+3 rule) has been in place for a long time. Only thing we can expect is a delay in the settlement that if SEC agrees to it then there will be an announcement with regards to this. If there are no changes to the rules, in my opinion we can see some forced selling by mid next week and the indices will drop further down.

fair investor · 8 Re: What is the truth behind these rumors? Sat Jul 30, 2011 12:51 pm

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windi5 wrote:I dont think there will be any change to that T-5 limit. SEC, might extend the time to clear the remaining credits.

Are there any significant amount of credits remaining?
Most of the investors transferred their credit to margin accounts. Only retailers with less than 5Mn portfolio couldn't transfer their credit to marginal accounts.
But do you believe that retailers didn't participate in the market during last one year ? I was 100% on cash at the mid of February. I personally believe that only little amount of credit left in the market
SEC must stop playing on credit and clearly state the current credit amount in the market ?

We need a transparency for the market.
Do you think all of us need to email SEC and ask how much credit left in the market ? I think we must.

saber · 9 Re: What is the truth behind these rumors? Sat Jul 30, 2011 1:00 pm

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Investor99 wrote:I don’t think SEC will remove the T+5 rule. This rule (T+3 rule) has been in place for a long time. Only thing we can expect is a delay in the settlement that if SEC agrees to it then there will be an announcement with regards to this. If there are no changes to the rules, in my opinion we can see some forced selling by mid next week and the indices will drop further down.

Even SEC 'extended' the deadline market will still fall since everybody knows we're in trouble - better sooner than later then. pale

gamaya · 10 Re: What is the truth behind these rumors? Sun Jul 31, 2011 5:16 pm

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fair investor wrote:

windi5 wrote:I dont think there will be any change to that T-5 limit. SEC, might extend the time to clear the remaining credits.

Are there any significant amount of credits remaining?
Most of the investors transferred their credit to margin accounts. Only retailers with less than 5Mn portfolio couldn't transfer their credit to marginal accounts.
But do you believe that retailers didn't participate in the market during last one year ? I was 100% on cash at the mid of February. I personally believe that only little amount of credit left in the market
SEC must stop playing on credit and clearly state the current credit amount in the market ?

We need a transparency for the market.
Do you think all of us need to email SEC and ask how much credit left in the market ? I think we must.

This is what I am also wondering, what I hear is some individuals in broker firms have bought 3-4 times credit for relatives accounts. I think these individuals have to be legally dealt with. Because the average investors suffer because of them.

Aamiable · 11 Re: What is the truth behind these rumors? Sun Jul 31, 2011 6:00 pm

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gamaya wrote:

fair investor wrote:

windi5 wrote:I dont think there will be any change to that T-5 limit. SEC, might extend the time to clear the remaining credits.

Are there any significant amount of credits remaining?
Most of the investors transferred their credit to margin accounts. Only retailers with less than 5Mn portfolio couldn't transfer their credit to marginal accounts.
But do you believe that retailers didn't participate in the market during last one year ? I was 100% on cash at the mid of February. I personally believe that only little amount of credit left in the market
SEC must stop playing on credit and clearly state the current credit amount in the market ?

We need a transparency for the market.
Do you think all of us need to email SEC and ask how much credit left in the market ? I think we must.

This is what I am also wondering, what I hear is some individuals in broker firms have bought 3-4 times credit for relatives accounts. I think these individuals have to be legally dealt with. Because the average investors suffer because of them.

Do they expect any thing special, some form of positive developments that broker firms to have bought 3-4 times credit for relative’s accounts?.................... Exclamation

vegasbabay · 12 Re: What is the truth behind these rumors? Sun Jul 31, 2011 6:09 pm

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Truth behind rumors? lol!

they are called rumors for a reason i think. lol!

gamaya · 13 Re: What is the truth behind these rumors? Sun Jul 31, 2011 8:04 pm

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Aamiable,
What I meant is they buy these during rallies expecting gains. Sometimes they pull it off and gain hugely. But sometimes they get stuck. Otherwise how can there be so much credit after SEC has given so much time for clearance and so many people have converted to margin accounts?

Aamiable · 14 Re: What is the truth behind these rumors? Sun Jul 31, 2011 8:10 pm

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gamaya wrote:Aamiable,
What I meant is they buy these during rallies expecting gains. Sometimes they pull it off and gain hugely. But sometimes they get stuck. Otherwise how can there be so much credit after SEC has given so much time for clearance and so many people have converted to margin accounts?

True, I also think that CSE should not go back to an excessive credit situation again..... Real investments and foreign investments are reluctant to return when there are fears of credit clearance.....CSE grow only on investments Smile

insidertrader · 15 Re: What is the truth behind these rumors? Sun Jul 31, 2011 9:51 pm

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I'm sure brokers are appealing (or now it seems have spread rumours among the retail traders) to relax credit controls not because they're concerned about us. These brokers have been giving credit on top of credit on non existing money for some time before the SEC came forward to control that to protect the whole Sri Lankan economy from collapsing on non existent money. Now the brokers are in trouble for the crimes they have committed. Now they put the blame on the SEC. They have made us do the same like they setting dogs on something. We're the dogs.

Imagine this situation. When you apply for a loan for a house you put your land as a security. So if you cannot pay the loan back the bank will sell the land and recover the money. That's the end of it. If you lease a vehicle the bank keeps the ownership. If you cannot pay back they take the vehicle and auction it. That's the end of it. No domino effect.

But imagine you take several housing loans against the same land as a security. Then if you cannot pay more than one loan, everybody is in trouble because everybody is depending on the same security. This is exactly what happened in the credit crisis in 2008 in USA it was shown in the movie 'Inside Job'. There was no real money involved. Sometimes the same asset has been used as a security for 3, 4 times. So if one business collapses it drags everything down with it.

I'm sure a similar thing has happened in CSE. Brokers have been giving credit without any control to big traders only god knows how much. We cannot trust the brokers or their reports. There are no honest brokers same as honest politicians. What the SEC did was if giving credit then it was separated to specialized margin trading such as in banks so that when they give credit they closely control it. If the value of the security is not worth enough it was fixed then and there without waiting for the whole thing to crash. If somebody wants to work with credit SEC has given a organized method, that is margin trading through margin trading providers. Because credit should be closely monitored. I'll steal an example someone gave in another post. When you build a house you get a bank loan from the bank. You don't get the loan from the hardware store.

So I believe the reason the brokers are spreading rumors and forcing investors to think 'it's the fault of the SEC and its rules' is that they are now losing because they have been giving credit for god knows how much. We have only cleared 50% so far and still brokers are controlling that to not go over that 50%.

I believe the SEC should be firm and punish these brokers for the crimes they have done.