CSE advises clients of non-compliant brokers to transfer share portfolios

The Colombo Stock Exchange (CSE) yesterday advised clients of four stockbroker firms to transfer their share portfolios to any other stockbroker of their choice due to those four not complying with the CSE stockbroker rules pertaining to capital adequacy and shareholders’ fund requirements.

“The existing clients of the 04 stockbroker firms set out below, whose trading activities have been prohibited due to noncompliance with Rule 5.1.1 and Rule 5.2.1 of the CSE stockbroker rules, who wish to transfer their securities portfolio/s to any other stockbroker firm/custodian bank of their choice are kindly requested to contact the respective stockbroker firms,” CSE said.

The four brokerages listed were; Nation Lanka Equities (Pvt) Ltd., Navara Securities (Pvt) Ltd., TKS Securities (Pvt) Ltd., and Claridge Stockbrokers (Pvt) Ltd and they have been prohibited from carrying out trading activities.

Both Nation Lanka and Navara Securities are noncompliant with minimum capital adequacy and minimum shareholders’ fund requirements while TKS and Claridge have to fulfill only minimum shareholders’ fund requirement. The CSE Stockbroker Rule 5.1.1 says, “Each stockbroker firm trading in equity and debt securities shall, at all times, maintain a minimum capital adequacy ratio of 1.2 computed in accordance with Annexure 6 of these rules, subject to maintaining a minimum liquid capital of Rs. 35 million.”

The rule 5.2.1 says, “Each Stockbroker Firm trading in equity and/or debt securities shall, at all times, maintain a minimum shareholders’ fund requirement of Rs.100 million or 50 percent of the firm’s stated capital, whichever is higher.”

The CSE said the four stockbroker firms will be permitted to resume all trading activities no sooner they comply with the relevant requirements as applicable.