Sri Lanka on Thursday allowed foreign-owned companies registered by the Securities and Exchange Commission (SEC) to lend money to investors in the island nation's stock market, the central bank said on Thursday. The bank's decision comes after the Colombo Stock Brokers Association in December made that request to President Mahinda Rajapaksa, to help boost flagging trading.
"This move would help develop the business of margin providing, and also increase market activity by improving the access to finance for investors," the central bank said in a statement. The move will benefit those brokerages with foreign partners, and encourage more brokers to look outside for money. "The market can have a lower cost of funds and it will increase the trading volume and turnover," TKS Securities CEO Hussain Gani said. Sri Lanka's stock index has been sliding this year due to credit concerns and fears of manipulation, which the SEC has started probe. It is Asia's worst performing market so far this year with a 7.7 percent fall.
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