“The market is smart,” he said.
SEC Director General Malik Cader told a recent seminar that in other countries too where there are such price bands in place to check any unusual movement of stocks and shares, the components that go to make such bands are not divulged to the public.
However a high networth investor told this newspaper that not knowing the ingredients that go to make SEC’s price band are against the principles of transparency.
“Previously we knew that when there was a 10% price variation of a stock, the band would be slapped, but now we don’t know,” the source said. It’s the retail investor who gets his fingers burnt, neither the company nor the big shareholders are affected by such bands, he added.
But Cader said that based on the circular that was sent to the market in regard to the new price band, the market has since begun disciplining itself by being aware of the mechanics that go to make the price band.
Courtesy - Sunday Leader