Hibernated brokers returning to CSE
Some stockbrokers who voluntarily moved out of the stock market due to lack of business and regulatory requirements are dusting off the cobwebs in a bid to get back into the game.
This has come in the wake of another who went bust trying to make a comeback to the market after applying for a new licence, industry sources said.
Navara Securities (Pvt) Ltd (NSL), TKS Securities, Claridge Stockbrokers and Nation Lanka Equities (Pvt) Ltd (NLL) had to stop their businesses this year. NLL has fulfilled criteria of the Colombo Stock Exchange (CSE) and is awaiting the Securities and Exchange Commission (SEC) final approval, they added.
Last January NSL decided to adopt the Voluntary Inactivation of Business Operations while the CSE decided to prohibit NLL from trading activities in October 2017. As per CSE rules, stockbroker firm may, within two years from the effective date of inactivation of business operations of the firm, reactivate its business operations.
Early this year NSL requested clients to transfer stock portfolios with the company to another stockbroker firm at their earliest.
Certain brokering firms during the last two years have allegedly been critical in struggles which prompted them to cut costs since the crisis in the CSE nearly four years ago, but now many like Softlogic Stockbrokers (SSB) are on an expansion drive. They started the first outstation branch in Jaffna early last month. SSB reached a consensus to locate four outlets in namely Jaffna, Kandy, Negombo and Matara. Given the renewed political interest, the market has already shown signs of improvement with index moving up since the election announcement with the CSE trading at one of its lowest P.E. multiples since the end of the war with stocks trading relatively low to its corporate earnings.
“With prevailing low interest levels the CSE offers a wide range of benefits among higher dividend yields,” Eardley Kern Head of Sales at Softlogic told the Business Times. The Government proposals to list state owned enterprises starting with the non-strategic enterprises will spur interest in the market, driving significant growth in market size, he said noting that this is critical to progress from current classification of a frontier market to an emerging market and a vibrant capital market.