Sep 17, 2020 (LBO) – Colombo Stock Exchange (CSE) and the Securities and Exchange Commission of Sri Lanka (SEC) have launched the future of stock trading with the Digitalization of the Sri Lankan Stock Market.
Prime Minister Mahinda Rajapaksa visited the CSE today for a special market opening ceremony organized to mark the event.
To promote agility and operational efficiency in the capital market, the SEC along with the CSE has taken steps to offer investors a fully digital onboarding experience, enable seamless post-trade and settlement and adopt e-contract notes and e-statements.
Chairman of SEC, Viraj Dayaratne says that the complete digitalization of CSE is a fundamental transition that will usher in a new era for the Sri Lankan stock market and this achievement is undoubtedly the most significant achievement since the Automated Trading System was introduced way back in 1997.
“I appeal to the large companies in Sri Lanka who are yet to list – come forward and list your companies in the Colombo Stock Exchange – we need to increase the depth and the breadth of the market – to the SMEs and Startups, it is your turn as well,” he said.
“We have relaxed the listing requirements and there is huge potential to raise the much-needed capital – and to investors, both local and foreign – come and invest – the valuations are great.”
Under this digitalization initiative, an online account opening process would be facilitated whereby an investor could open a CDS Account, start trading and make settlements electronically without the need to physically visit an office of a stockbroker.
Presently internet-based trading is enabled through all stockbrokers and the account creation and maintenance at the CDS and fund settlement between stockbroker firms and banks are fully electronic, investors are therefore urged to register for online trading and online banking services.
However, under this initiative, the account opening process with the stockbroker which is presently paper-based, and the post-trade settlement process for local retail individuals which is mostly cheque based, will be converted to an electronic format thereby bringing significant operating efficiencies to the system and improving the client experience and convenience.
This will also assist in ensuring uninterrupted market operations in the event of unexpected restrictions.
In June, the SEC has approved amendments to the Stockbroker Rules, Central Depository Systems (CDS) Rules, and Listing Rules submitted by the CSE, which will enable the stock market to transition from a paper-based to an electronic-based environment.
Under the amended rules, Statement of Accounts and Bought and Sold Notes sent by stockbroker firms to their clients, and CDS monthly statements sent to account holders will be converted from paper-based hard copies to electronic format.
The rule amendments will facilitate the Listed Companies to send Annual Reports to their shareholders in a mode other than in printed form and the payment of dividends through electronic bank transfers.
Investors are encouraged to make available their email addresses, bank account numbers, and mobile numbers in the prescribed format to their stockbrokers in order to continue to receive the relevant statements in an uninterrupted manner.
These changes are part of the market digitalization initiative initiated by the SEC – CSE joint committee.