Early queries deter improper stock trading, Sri Lankan regulator says

COLOMBO (EconomyNext) – Early queries about unusual trades from stock market participants by Sri Lanka’s the capital markets regulator has deterred improper behaviour, it said in a report.

The Securities and Exchange Commission (SEC) said its Surveillance Committee summons “minor offenders” and subsequently warns them to refrain from engaging in improper trading practices in the future.

A register is maintained whenever SEC Surveillance calls brokers or the Colombo Stock Exchange to seek clarifications verbally on minor issues where urgent attention is needed.

“On many occasions, the early inquiries prevented improper trading activities from perpetuating further,” the regulator said in its 2014 annual report.
The SEC  Surveillance Committee also calls for written explanations from parties involved in suspected market abuse.

It prioritises surveillance concerns, where only the most important and significant market impacting observations eventually became referrals that need further probing while the others are categorised as “surveillance concerns”.

The SEC made over 350 surveillance concerns relating to erratic share price and volume movements and abnormal trading patterns in 2014.

The “surveillance concerns”, which do not warrant full referral reports, are sorted for further monitoring and analysis.

“Once flagged, the concerned traders and stocks were continuously monitored to observe if a new (or) particular trend emerged and if a fully-fledged referral was warranted,” the SEC said.

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