Stockbrokers on an expansion high
CSE Chairman Dumith Fernando (centre) in conversation with invitees at a CSE event last week. Pic by Nilan Maligaspe
Stockbrokers are drawing up plans for branch expansions in the wake of the unprecedented highs in the stock market.
“Now is the time for expansion. We have had such a tough time before COVID-19. It was so difficult that we had to scale down and retrench some of our staff. Now it is a good thing that many in the outskirts of Colombo and in the rural areas are interested in investing in the Colombo Stock Exchange,” a stockbroker told the Business Times last week.
Dimuthu Abeyesekera, CEO Asha Securities Ltd, is planning to set up regional service centres and start a branch before the year-end. “We are looking to set up service centres around the country. We are planning to have a branch in Jaffna and start a few more before the year-end,” he told the Business Times on the sidelines of a Colombo Stock Exchange (CSE) media event.
The CSE is also jumping on board to expand regionally. Rajeeva Bandaranaike, CEO CSE said that the exchange is looking at establishing regional centres. “There is a thinking that due to the successful digitalisation of the exchange that brick and mortar outfits are unnecessary, but it is imperative to create visibility of the stock market, especially at this time. We also want to create wide awareness,” he said. He added the CSE is encouraging stockbrokers to go regional.
Certain other brokers are recruiting more staff to cater to the large demand. “We are encouraging retailers especially in rural areas to invest in the market. The demand is quite high at the moment. We are recruiting new employees,” a second stockbroker said.
Over three years ago it was a different story when the stock market was barely breathing. Almost all stockbrokers closed their branches in a move to cut costs and realign their bottom lines. It was a tough time; the market was in the dumps. All the brokers were struggling, an investment adviser said. This issue was exacerbated by the Securities and Exchange Commission directive to implement a risk-based Capital Adequacy Requirement (CAR) at the time owing to the risky environment the market was operating in.
The CSE through its market development activities embarked on an awareness drive in 2017 which is now raking in results, a CSE official said. “We are continuously doing this and coupled with digitalisation we are witnessing new investors coming into the market every day,” he said. Now, domestic traders account for 95 per cent of the daily turnover. Also, the domestic participation in the daily turnover increased to 95 per cent in 2021, up from 80 per cent in 2020.
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