Second segment of CSE’s Multi Currency Board soon
The Colombo Stock Exchange (CSE) has got approval from the Central Bank to permit local companies intending to go public on the Multi Currency Board to open foreign currency accounts for transactions.
A circular issued on July 30 by the Department of Foreign Exchange of the Central Bank has authorised companies incorporated here and publicly listed on the CSE to open Special Foreign Currency Accounts (SFCA) to facilitate foreign currency denominated investments on the CSE. This approval will enable the launch of the second segment of the Multi Currency Board.
“We are currently drawing up the rules to facilitate local companies to raise capital in foreign currency,” Rajeeva Bandaranaike, CEO CSE told the Business Times. This initiative is intended to increase the attractiveness of CSE’s trading platform by potentially boosting trading and enhancing liquidity in foreign currency denominated securities by local firms.
Mr. Bandaranaike added that there have been requests by large companies transacting in dollars for this facility to raise capital in dollars for regional expansion and the like.
The first segment of the Multi Currency Board was launched over three years ago for dual currency trading and settlement of foreign currency denominated securities allowing foreign firms to trade on the CSE through strong currencies including Chinese Yuan etc.
The CSE obtained Exchange Control approval to list foreign companies in the CSE in April 2016 to enable the first segment of the Multi Currency Board. A foreign company that seeks a listing in this Multi Currency Board must be first listed in the stock market of that country, and it will be a cross listing of shares – which is when a firm lists its equity shares on one or more foreign stock exchange in addition to its domestic exchange.