Request for credit exposure reports was routine exercise, says CSE

• Stresses that intention was not to single out any specific listed entity or investor
• Acknowledges the circular dated Feb.1 caused “certain misperceptions” among some investors

Stock market operator, the Colombo Stock Exchange (CSE) in a letter on Wednesday clarified that the request for weekly reports on specific stocks from brokering firms was a mere routine exercise and by no means was intended towards disrupting the market sentiment.

The announcement came after a section of market participants took to social media to express their anger on the CSE’s move, which according to them, resulted in the benchmark All Share Price Index to record the highest single day loss on Tuesday. Acknowledging that the circular dated February1, 2021 caused “certain misperceptions” among some investors, the CSE stressed the objective was to maintain a stable stock market.

“CSE welcomes the recent heightened activity levels of the stock market. The CSE is also acutely aware of its responsibilities in supporting the medium and long-term sustainability of a robust market and the best interests of all market participants. Maintaining a stable stock market in the medium and long term is a priority for the CSE,” the letter addressed to stockbroker CEOs said.The CSE pointed out that the circular merely requested information on credit extended by stockbroker firms, as done routinely, to enable the Securities and Exchange Commission and the CSE to better understand the nature of such credit extended. CSE stressed that the request was purely for the purposes of analysing and assessing systemic risk in fulfilling its functions to maintain the stability of the market and for the protection of investors and not to single out any specific listed entity or investor.

“The circular has not in any way placed any restrictions on the ability of stockbroker firms to extend credit on any particular security, nor has it placed any limitations of any kind on the tradability of any security by any investor,” the market operator said.

The CSE maintained that any information collected through the process will only be used for internal analysis purposes and will be kept strictly confidential. “The CSE’s objective is to monitor aggregate market-wide information. Responsibility for managing individual client-level exposure will remain the responsibility of the respective stockbroker firm,” the letter read.