Jan 06, 2016 (LBO) – Sri Lanka’s Colombo Stock Exchange has obtained exchange control approval from the Finance Ministry to start listing foreign companies in dollar denominated securities, CSE Chairman Vajira Kulatilaka said.
Kulatilaka told LBO that the idea is to make the country a regional hub for financial activities.
“This is the first step towards that. We will have in place a world class platform after putting the CCP (Central Counter Party),” he said.
“In the first phase, only foreigners can participate. We are providing infrastructure for foreign fund managers,” he said.
“They will come with dollars, go with dollars. In between they are using our infrastructure facilities. But they have to pay fees in rupees,” Kulatilaka said.
The foreign companies who seek a dollar listing here should adhere to necessary governing standards. Accounting and auditing has to be carried out in internationally accepted (IFRS) standards.
“This will beneficial not only to the stock exchange but also to investors and brokering companies. It also beneficial for the country as a whole since it will become a regional center.” Kulatilaka stressed.
Talking about obstacles Kulatilaka pointed out that there is a possibility of Sri Lankans converting rupees into dollars and putting them in these accounts.
“Sri Lankans are converting and putting in going to be a barrier. Government with today’s problems may not agree on it.” he said.
“But this is more to do it with the foreign investors. For example shares of Sri Lankan companies are owned by foreign investors. So similarly they can own dollar denominated securities also.”
The Chairman also noted that there will be a separate board for dollar denominated securities at the CSE in the future.
The CSE however is yet to obtain the approval from the Securities and Exchange Commission to implement the system.
“After getting the approval and setting the necessary standards, we have to promote it and we expect this year to have at least one or two getting listed.” Kulatilaka said.
The government also wants CSE to play an active role to attract foreign companies to be listed in the Exchange and 2016 Budget also encouraged the move.