Colombo Stock Exchange

Friday, July 17, 2009
The Colombo Stock Exchange (CSE) is the main stock exchange in Sri Lanka. It is one of the most modern exchanges in South Asia, providing a fully automated trading platform. The vision of the CSE is to contribute to the wealth of the nation by creating value through securities.
The headquarters of the CSE have been located at the World Trade Center Towers [1] inColombo since 1995 and it also has branches across the country in Kandy, Matara,Kurunegalaand Negombo.[1] As of 31 December 2007, the Colombo Stock Exchange had 235 listed companies with a combined market capitalization of $7.6 billion.[2]
Share trading in Sri Lanka dates back to 1896 when the Colombo Brokers Association commenced the share trading in limited liability companies which were involved in opening plantations in Sri Lanka.
The establishment of a formal stock exchange took place in 1985 with the incorporation of the Colombo Stock Exchange (CSE), which took over the Stock Market from the Colombo Share Brokers Association. It currently has a membership of 15 institutions, all of which are licensed to operate as stockbrokers.

[edit]Current status

As of 31 May 2008, 234 companies are listed on the CSE, representing twenty business sectors with a market capitalization of 850 billion rupees (over US$7.2 billion), which corresponds to approximately 24% of the Gross Domestic Product of the country.
There are currently two indices in the CSE:
The All Share Price Index (ASPI)
The Milanka Price Index (MPI)

[edit]Trading session
The exchange has pre-market sessions from 09:00am to 09:30am and normal trading sessions from 09:30am to 02:30pm on all days of the week except Saturdays, Sundays and holidays declared by the Exchange in advance.[3]

The CSE operates 3 main systems:
The Central Depository System
Automated Trading System
Debt Securities Trading System
The automation of the Exchange commenced in 1991 with the installation of a central depository and an electronic clearing and settlement system for share transactions. The trading activity was automated with the installation of the Automated Trading System (ATS) in 1997.
The technology introduced by the Exchange has significantly enhanced the competitiveness of the CSE and has provided a more efficient and transparent market. The CSE is currently in the process of introducing a debt securities trading system for trading of fixed income securities.
As a modern exchange, the CSE now offers state-of-the-art technological infrastructure to facilitate an "order-driven trading platform" for securities trading - including shares, corporate debt securities and government debt securities.

World Federation of Exchanges (wfe) [2]
The CSE was elected as a member of the World Federation of Exchanges in October 1998 and also was the first Exchange in the South Asian Region to obtain membership. The CSE is the 52nd Exchange to have been elected to membership of the Federation.
South Asian Federation of Exchanges (SAFE) [3]
The CSE became a founder member of the SAFE in January 2000, and is currently the Chairman of the Association. SAFE consists of 17 Exchanges from India, Pakistan, Bangladesh, Sri Lanka, Nepal and Bhutan. Its primary objectives are to encourage cooperation among its members in order to promote the development of their individual securities markets, to develop an integrated regional stock trading system, and to offer listing and trading opportunities for securities issued in the region.

[edit]Foreign investors
Companies listed on the CSE have seen a large increase in foreign investment following the ceasefire agreement signed by the Sri Lankan Government that brought and end to the 20 year old civil war.
Foreign investment in the stock market is freely permitted except in the case of a few companies where there are certain restrictions imposed. Investment in shares in Sri Lanka and repatriation of proceeds take place through Share Investment External Rupee Accounts (SIERA) opened with licensed commercial banks. Income from investments such as interest, dividends and profit realized from such investments are not subject to Exchange Control Regulations by the Sri Lankan Government.

[edit]Post ceasefire agreement boom
After witnessing mediocre performance throughout the 1990s mainly due to the Sri Lankan Civil War, the ceasefire agreement signed in 2001 saw unprecedented growth in the both indices of the CSE. The All Share Price Index, which was hovering around the 500 mark in August 2001, has now surpassed the 2000 mark.
This has led the CSE to be consistently dubbed as one of the best performing markets in the world. As of 2005 the CSE had recorded a consistent annual growth of over 30% in the All Share Price Index (ASPI) for the previous three years. It surpassed that in 2006, with the ASPI growing by 41.6 %[4], and the MPI growing by 51.4%[5] during the calendar year.
Buoyed by improved investor confidence due to positive political developments and strong corporate results[4] the CSE continued to achieve strong growth in 2007, as the ASPI surged passed the 3,000 mark for the first time in its history on February 13,[4][5][6] reaching a record high for the seventh consecutive day.[5] The CSE has also recorded an average daily turnover of Rs. 776.8 million for 2007.