Securities and Exchange Commission has issued a new directive on Monday (02) to the Colombo Stock Exchange (CSE) and all Listed Companies regarding the trading of warrants.
The SEC issued a directive, effective from April 02, prohibiting the CSE and all publicly listed companies from trading of warrants in the secondary market after the initial cut-off date.
The CSE was further instructed to inform all public listed companies of the prohibition.
Explaining its measure the SEC said under the listing rules of CSE, listed companies are required to announce to the market the terms and conditions of warrants at the time of issuing them.
Since the terms and tenure of a warrant are determined by the risk attached to the financial instrument, the warrant holders should not be allowed to transfer the risk attached to the terms of such share warrant after the risk event has occurred, by extending the cut-off date, the SEC explained.