The Securities and Exchange Commission (SEC) has begun to formulate a mechanism akin to the model practised in Thailand, where price curbs of various sizes will be applied to different stocks, as an option against current price bands, the Business Times learns.
“The SEC Commissioners gave the go ahead for this on Wednesday at its commission meeting and a team is currently ‘tweaking’ a formula and will come up with a new price band system,” an informed source told the Business Times.
The paper said last week that the controversial price band rule was expected to be discontinued but at an SEC commission meeting on Wednesday, no decision was taken to lift the bands which continue. Brokers had expected the SEC to lift the restrictions after representations were made to the SEC last Tuesday.
The source said the SEC has heavily ‘borrowed’ from what’s currently in effect in the region and they’re especially interested in the Thai model. “It’s supposed to be a ‘very’ transparent formula where different types of shares will be placed in various levels of bands,” he said agreeing that the current price band is not a panacea for all ills, but the SEC had to enforce it due to what was happening to the market.
Some analysts said that the market has learnt to cope with the price curbs. “This is a very robust and resilient market and it can withstand any shocks. After all it has successfully survived through a 30-year war and finally come out on top,” Sarath Rajapakse, Director Capital Trust said. |
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