Posted by Following the 10% price band imposed on CSE trading, the average daily turnover of the Colombo Stock Exchange has increased, says the regulator.
According to SEC, following the band the daily turnover of the SEC has increased to Rs. 2.58 billion compared to Rs. 2.52 billion existed before the band.
SEC officials added, the “Price Band” imposed on the 4th of August has helped the market.
The officials say, the “Price Band” also played a part in the Milanka Price Index surpassing 6000 points today the first time in the CSE history.
MPI represents 25 of the most liquid firms listed in the CSE.
The All Share a shot-while ago stood at 5,868.66 points gaining 83.49 points so far for the day.
SEC says, measures to relax the Price Band have been already finalized.
It says, those measures includes curbs on excessive credit by brokers to investors and to curtail excessive price movements without any fundamental reason.
However a SEC official who is closely working on the issue said, “top figures in the Government’s circle” is highly supportive of the “price band”.
He said, some even don’t want the “price band” to be removed.
SEC so far has not taken a final decision on when to remove the band.
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If the price bands have helped the turnover to increase, wonder why other countries have also not adopted a similar strategy ? I think this is an absurd and a baseless argument. A market should be free of any price controls. If controlled, it will not become an efficient free market. This is what economics teach.
In fact the price bands have made it possible for a lot more manipulation and initially drove off the retail investors away. It had been nothing but the low interest rates and lack of other investment opportunities which fueled the turnover levels.