Colombo Stock Exchange (CSE)

This blog post basically focuses on what are the general information that any person might need to know when you are dealing with CSE. Motive behind this is all the time I hear bits and pieces of CSE and its transaction processes but never was able to get the full picture. All the information provided in this post have been extracted from www.cse.lk as it is the primary source that we can learn about it. Hope this helps out to clear the clouds.

1. Only the listed companies (listed in CSE Indexes) can go for public share offerings. This means if a company willing to offer shares to public investors, first these companies need to be in compliance with an Exchange's set of listing rules such as previous profit records, issued/paid up capital etc. in order to be admitted to the official list. There are two price indexes in CSE viz. All Share Price Index (ASI) and Milanka Price Index (MPI)

2. There are two types of share offerings.

A). From New share issue (Primary market) – This is called “IPO (Initial Public Offering)”. In primary market stocks (also called ‘security’) has to by directly from Issuer Company.

B). on ordinary market (Through stock brokers) – Here investors can buy or sell shares from or to another investor. This can take place only after an IPO in primary market.

3. CDS (Pvt.) Ltd (Central Depository System) – Fully owned subsidiary of CSE which perform functions of Clearing, Settlement and Registration from the Stock Exchange on behalf of CSE. Every investor has to register (open an account) at CDS via a preferred stock broker and will be given a unique account number that will correspond to each and every detail/transaction related to that particular investor. CDS account enables investors to participate in paperless trading on the Colombo Stock Exchange. CDS account will be maintained in double-entry book-keeping format and will be updated on real time.

4. Stock brokers – Authorized entities to buy and sell shares on behalf of investors. The CSE has 15 member firms and 9 trading member firms authorized to buy and sell shares at the moment.

5. Buy & Sell shares through a stock broker –

A). Investor must first find yourself a stockbroker /custodian bank and open a CDS account through that participant(Participants are those who authorized to do transactions on behalf of you, such as stock brokers).

B). Once they confirm your CDS account number, you can contact your broker through the Phone, Fax, Personal visit or from the Internet to trade in the secondary market.

C). Conditions - The buyer must make payment for shares bought by the 3rd trading day after the purchase (T+3). The seller will receive payment for shares sold by the 3rd trading day after the sale (T+3)

6. Trading sessions - The Exchange is open for continuous trading from Monday to Friday from 9.30 a.m. to 2.30 p.m. “Pre-Open” session is from 9-9.30am where investors can order to buy and sell, but can amend those orders before 9.30am.

7 Trading Systems

A). Automated Trading System (ATS): is a real time system that provides secondary trading of equities. It supports high-speed transactions, price-time matching for orders, detailing on price history, online reporting, corporate announcements, information on holding stocks and pending orders.

B). DEX (Debt Securities Trading System): designed to facilitate the trading of corporate and government debt securities.

Source: http://www.cse.lk/welcome.htm