CSE to expand product suite, build infrastructure
View(s):The Colombo Stock Exchange (CSE) digitalisation has managed to triple the number of investors within two years and expanding the product suite offering a wider range for investors to choose from while building proper infrastructure will be the focus this year.
Rajeeva Bandaranaike, CEO, CSE told the Business Times that the CSE completed all three phases of digitalisation and also, successfully made an effort to broad base the market. “More than 80 per cent of the new accounts opened are of those 40 years and below.” Acknowledging the need to build an active and robust cash market, he said there is a need for liquidity to enable products such as derivatives and futures.
“We also need proper infrastructure such as a delivery versus payment system and a Central Counterparty System (CCP) that gives the counterparty a guarantee. Buyers will be guaranteed delivery of shares and sellers will be guaranteed delivery of sales proceeds through a CCP.”
He added that the model of how it will work has received the regulator’s approval.
The market operator has commissioned the London Stock Exchange Group for a clearing system. The framing of the rules has started, Mr. Bandaranaike said noting the CSE has incorporated a subsidiary called CSE Clear to act as the clearing company and by mid this year will see the CSE setting up the CCP.
Immediately regulated short selling and stock borrowing and lending will be introduced, which will have a fair bit of traction in the market, he said.
We are planning to introduce debt-related products such as green bonds and perpetual bonds as soon as possible.”
Real Estate Investment Trusts which is the only new product the CSE has introduced in the recent past, have not taken off very well. Mr. Bandaranaike pointed out the prohibitive market environment hasn’t been very conducive for the product to be popular.
“Rental yields have not been giving required returns. Also, we found a few gaps in the framework of this product, and with the regulator these are now being closed.”
The CSE has also discussed with the Securities and Exchange Commission to tweak or amend the rules to accommodate State-Owned Enterprises (SOEs) in going public without compromising the continuous listing requirements.
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