Unrealistic Orders, Unusual Prices: Why the Colombo Bourse Pulled the Plug Today

COLOMBO (News 1st); Trading on the Colombo Stock Exchange (CSE) was suspended today (7) after an unusual, rapid surge in the share price of a newly listed company, prompting an immediate halt, a full-day closure, and a formal investigation by market authorities.

A Halt Within 20 Minutes, Then a Full-Day Closure:

The interruption started fast. Just 20 minutes after the market opened this morning, transactions were temporarily suspended. Hours later, the CSE announced that trading would remain halted for the rest of the day.

Official market notice (CSE):

“Market Closed. Based on the request made by industry participants and to ensure a fair and orderly market the CSE in consultation with the Securities and Exchange Commission (SEC) has decided to close the market for the day. As notified earlier CSE has cancelled all orders and transactions carried out today prior to market halt. Trading will resume tomorrow as usual.”

Why the Halt? CSE Explains Irregular Pricing:

This afternoon, the CSE issued a clarification describing irregular prices observed in morning trades of the newly listed counter.

CSE clarification:

“The price of certain transactions of Wealthtrust Securities Limited carried out in the morning today, appeared to be at irregular prices. Since this may have had an effect on the buying power of investors, the Colombo Stock Exchange (CSE) halted the market to ensure a fair and orderly market.”

What Exactly Happened: From Rs. 7 to Rs. 25,000:

The sequence was stark. On December 17, Wealth Trust Securities Limited—a primary dealer in government securities including Treasury bills and bonds—was listed on the CSE.

The company announced that 71 million ordinary shares, representing 5.84% of its total shares, would be issued to the market as ordinary shares. The first share issue of this newly listed company took place today.

Opening price: Rs. 7 per share
Within ~20 minutes: a dramatic surge to Rs. 25,000 per share

That extraordinary spike triggered the market suspension and an investigation by the CSE.

Speaking on the record, Rajeeva Bandaranaike, Chief Executive Officer of the Colombo Stock Exchange, laid out the background and rationale.

“Today we had the opening and the listing of a new company, Wealth Trust Securities, and the issued price was at 7 rupees. At the time it opened, most unfortunately some investors had put in orders at very high prices, almost unrealistic prices at 25,000. We must remember that in an IPO on the opening day, we do not restrict pricing because this is a process of price discovery… we allow the freedom for investors to transact at a price they think is suitable, both on the buy and the sell side. But we certainly do not expect someone to come in at an unusually high price because that causes different risks…We observed this unusually high price soon after trading commenced, and we took immediate action to halt the market to investigate the reason.”

The Securities and Exchange Commission of Sri Lanka confirmed that an investigation is in motion and emphasized that market awareness has helped avert panic.

Senior Prof. D.B.P.H. Dissabandara (Chairman, SEC):

“By now with the announcements… investors know what happened. We have created some kind of awareness and people are aware of it. There is no huge panic in the market—that is a good sign. The only thing is we need to investigate this. We are very serious on that. We are about to start… we have already found certain information… there is a methodical way of doing it… we will be analysing it… and with that we will be able to make a conclusion.”

Asked whether this might have been a deliberate attack, the SEC Chair replied: “It’s too early to comment.”

Wealth Trust Securities issued a statement this afternoon, stressing that the trading halt arose from a market-driven event linked to an execution error—not from company or pre-IPO shareholder actions.

Company statement (excerpts):

“Based on information available to the Company, the trading halt was purely a market-driven event arising from this execution error and was not caused by any action, disclosure, or transaction initiated by the Company or its pre-IPO shareholders. The Company further confirms that no shares have been sold by pre-IPO shareholders in the market. There is no impact on the Company’s fundamentals, operations, or previously disclosed information.
We understand that CSE is currently investigating the root cause… We urge the Capital Market Regulatory Authorities to investigate and act… to prevent similar market disruptions in the future.”

The CSE has confirmed it cancelled all orders and transactions carried out today prior to the market halt, and said trading will resume tomorrow as usual after the cleanup. 

A formal investigation is underway to determine the root cause and to ensure the fairness and orderliness of the market going forward.