Financial Times

Scripless trading soon in Sri Lanka

Central Bank governor A.S. Jayawardene said last week that Sri Lanka is one of the first few countries in Asia to launch a scripless securities settlement system that would make Colombo a financial centre in the region

Delivering the keynote address at the seminar on "Scrip-less Securities Settlement System and the Current Economic Outlook" organized by First Capital Treasuries Ltd, the governor said this was the first investor awareness programme and the start of a process to keep people informed about the significance of the new system.

Jayawardene said the Central Depository System (CDS) would soon replace a manually operated cumbersome system. CDS would record total transfers electronically and issue receipts. It would not be a certificate but it would maintain the holding effectively with the system supporting the entire file maintained in the CDS secure from the point of issue to the final redemption. The system enables the primary dealer to offer an efficient system of settlement. The primary dealers would be able to offer better rates while ensuring total ownership and transfer securely, which would take care of the settlement.

He said that this awareness campaign should be extended outside Colombo and noted that the on-line market would be a huge one.

K.G.D.D. Dheerasinghe, Superintendent and Registrar, Public Debt Department, Central Bank, said that this awareness programme should be country-wise. First those operating commercial banks and other financial institutions should be educated and then the awareness should be extended to the secondary layer of investors of government securities and "finally we must do this before people ask us what the new system is all about".

In the scrip-based system at the moment there are around 300,000 treasury bills outstanding. The printing of certificates is very expensive and someone has to collect these certificates from the Central Bank. The primary dealers have to buy or copy them out physically, endorse and deliver when it is matured. They would be entered in the computer now and reconciled. Ajith Devasurendra, CEO/Managing director, First Capital Treasuries Ltd moderated the forum. (QP)