Trading on the Colombo Stock Exchange (CSE) was suspended for the entire day today after an extraordinary price surge in a newly listed stock raised concerns over market orderliness and investor protection.
The disruption occurred just 20 minutes after the market opened, when shares of Wealth Trust Securities Limited—making their debut on the exchange—jumped from an opening price of Rs. 7 to as high as Rs. 25,000 in a matter of minutes. The unusual transactions prompted an immediate market halt, followed by a full-day closure in consultation with the Securities and Exchange Commission (SEC).
In a market notice, the CSE said all orders and trades executed prior to the halt were cancelled to ensure a fair and orderly market.
Explaining the decision, CSE Chief Executive Officer Rajeeva Bandaranaike said the spike resulted from investors placing “unrealistically high” orders during the price discovery phase of the initial public offering. While IPOs allow unrestricted pricing on the first day, he said such extreme bids posed systemic risks and warranted swift intervention.
The CSE later clarified that certain transactions in the counter appeared to be at irregular prices, potentially affecting investors’ buying power.
The SEC confirmed that a formal investigation is underway to determine the root cause of the incident. SEC Chairman Senior Prof. D.B.P.H. Dissabandara said authorities were analysing available information and stressed that timely disclosures had helped prevent panic in the broader market.
Wealth Trust Securities, a primary dealer in government securities, said the trading halt stemmed from a market-driven execution error and not from any action by the company or its pre-IPO shareholders. The company also confirmed that no pre-IPO shares were sold and that its fundamentals remain unchanged.
Trading on the CSE is scheduled to resume as usual on the following trading day, pending the outcome of the investigation.
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