Digital share broking accounts in the works
The Colombo stock market is gearing to introduce an end-to-end digital Central Depository System (CDS) account opening process by leveraging on technology in a bid to broadbase the local investor base.
Chairman Colombo Stock Exchange (CSE), Ray Abeywardena said this will go a long way in making the market accessible around the country which is pivotal to the progress of the Sri Lankan stock market in the long run.
He said this delivering the welcome speech at the 22nd Annual General Meeting of the Asia-Pacific Central Securities Depository Group (ACG) in Colombo on Tuesday.
“The technological revolution is now shaking the financial services industry, probably more than any other industry. In terms of the capital market, disruption driven by FinTech is exhibiting entirely new conceptions of investing, trading, clearing, settlement, and custody and look to drive a robust infrastructure. It is therefore opportune that we all understand the implications of FinTech on CSD, and the opportunities for CSD’s to leverage on FinTech to drive the growth of our respective capital markets.”
Securities and Exchange Commission (SEC) Chairman Ranil T. Wijesinhe in his presentation noted that the SEC is deeply committed to providing assistance and support for CDS to play a larger role in the ACG and also internationally.
“We intend not to stifle the market development but facilitate it – at the same time not being isolated from the world,” he added.
Dr. Indrajit Coomaraswamy, Governor Central Bank (CB) delivering the keynote speech stressed that the CB expects FinTech to show immense potential to enhance the financial landscape of the country.
“We are supportive of FinTech innovation, but we are also cognizant of the regulatory challenges they hold,” he said while acknowledging that regulation gets in the way of liberalisation.
Dr. Coomaraswamy noted that a committee to establish finding ways to reduce physical cheque payments found that dividend payments by listed firms made up a large volume of cheques still issued in the country. “The CSE should use settlement infrastructure and we request the CSE to consider the possibility of mandating use of electronic payment methods that are currently available,” he noted.
He stressed that data is the new currency but pointed out that in this backdrop where FinTech raises the potential of innovation in the financial services landscape, it also has enhanced risks.
While acknowledging that the branch banking system is in obsolescence, Dr. Coomaraswamy noted the challenge for the regulator is to make sure that digital development doesn’t annihilate the system all the while not blocking the progress in technological advancements.
He also cautioned of cyber risk in FinTech where customer data can be inadvertently compromised. “As a regulator the Central Bank is faced with the challenge of promoting technological advancement but they are also dealt with the task of doing so in a way that is not disruptive and ensures the stability of the financial sector. This is more complex than it sounds,” he added.
The ACG conference this year received an encouraging response with 25 depositories and clearing organisations from 19 ACG member countries across Asia Pacific confirming their participation. The over 114 delegates present was the largest gathering of depositories and clearing organisations Sri Lanka has ever hosted.