Oct 09, Colombo: Sri Lanka's Securities and Exchange Commission (SEC) has loosened the rules on broker credit and lifted the restrictions imposed on short-term trading by directors and workers of stockbroking firms.

The changes to the SEC rules will be effective from today, SEC stated in a press statement.

According to the statement, the SEC has allowed the stockbrokers to extend credit to their clients three times the adjusted net capital (i.e. net capital minus 50% of fixed assets) without having to deduct outstanding debtors from net capital.

However, when doing this, the stock brokers are required to compute the Net Capital adjusting all unsettled purchase transactions to reflect the excess of cost over market value.

The SEC under the new Chairman Dr. Nalaka Godahewa, with effect from today has lifted a rule that imposed a 20 percent upper limit on off market transactions (crossings) on the Colombo Stock Exchange.

The SEC has also removed the restrictions imposed on executive directors, employees, their spouses and their nominees of all licensed stock brokers and stock dealers from selling listed shares purchased from the secondary market for a period of 6 months from the date of purchase.

The SEC has stressed that brokers are required to ensure strict compliance with all rules and regulations applicable for extension of credit.