Formula Is Secret

Securities and Exchange Commission (SEC) on Friday refused to divulge the ingredients that go to determine its price band formula.
“In any country where such price bands are in place, the formula that goes to make such a mechanism is a secret,” he told this reporter at an SEC seminar upon being queried.
Price bands based on a secret formula of which the SEC is only allegedly privy have been imposed to prevent any unreasonable fluctuation in the prices of stocks and shares.
Previously such a band was limited to a 10% up and down movement of such stocks which investors said was transparent compared to the new secret mechanism.
However Cader said that the market understood the mechanics of the new price band and was disciplining itself accordingly.
On the issue of whether new listings would actually enhance market liquidity, when the ownership of such stocks too may be tightly controlled, SEC Chairman Ms. Indrani Sugathapala who was also present at the forum did not give a clear answer, other than saying that “privately held companies will have to be disciplined.”
Meanwhile SEC member Sujeewa Mudalige said that some garment firms were also lined-up to be listed in the Colombo Stock Exchange.
SEC targets market capitalization to increase to Rs. three trillion by year end because of new listings.
Mudalige said that due to the removal of anomalies on the withholding tax, corporate debt listed which was previously Rs. 30 billion, has since gone up in value. As at end last year there were 554,000 investor accounts maintained by CSE’s Central Depository System.  However only 7,000 of those were actively traded on a daily basis and  72,000 underwent at least one trade during the year.