Colombo Stock Exchange

Colombo Stock Exchange
කොළඹ කොටස් වෙළඳපොළ கொழும்பு பங்கு பரிவர்த்தனை
Type	Stock Exchange
Location	Colombo, Sri Lanka
Founded	1985
Currency	Rupee
MarketCap	2.56 Trillion Rs
Indexes	All Share Price Index (ASPI) Milanka Price Index (MPI)
Website	www.cse.lk

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] in Colombo since 1995 and it also has branches across the country in Kandy, Matara, Kurunegala, Jaffna and Negombo.^[1] As of 31st August 2011, the Colombo Stock Exchange had 235 listed companies with a combined market capitalization of 23.3 billion US dollars.^[2]

History

Share shirad 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.

Current status

Financial

As of 21 June 2011, 255 companies are listed on the CSE, representing twenty business sectors with a market capitalization of 2,400 billion rupees (over US$22.0 billion), which corresponds to approximately 44% of the Gross Domestic Product of the country.

There are currently two indices in the CSE:

1. The All Share Price Index (ASPI)
2. The Milanka Price Index (MPI)

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]

Technology

The CSE operates 3 main systems:

1. The Central Depository System
2. Automated Trading System
3. 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.

Affiliation

• World Federation of Exchanges WFE

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

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.

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.

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 surpassed the 2000 mark after that.

This led 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. CSE recoded the highest point in history on 26th February 2007. Milanka Price Index (MPI) reached 4,214.8 points on that day.^[6]

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][7] 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.^[7]

Post war boom

After the end of the Sri Lankan Civil War on 18th May 2009, CSE indexes increased rapidly creating new records. Market capitalization at the Colombo Stock Exchange reached record high on 06th October 2009 as it reached the Rs. 1 trillion mark for the first time in Sri Lanka’s history. ^[8] All Share Price Index (ASPI) broke the record for its previous high by marking 3549.27 points on 11th January 2010.^[9] CSE was the best performing stock exchange in the world in 2009 as it jumped 125.2 percent during that year.^[10]

See also

• List of South Asian stock exchanges
• Milanka Price Index

References

• CSE Annual Report 2004

1. ^ Sri Lanka's stock exchange opens new regional branch, Lanka Business Online
2. ^ Number of Listed Companies and Total Market Cap, Colombo Stock Exchange page on Wikinvest
3. ^ Market Hours, Colombo Stock Exchange via Wikinvest
4. ^ ^{a b c} "Historic day for Colombo Bourse". The Daily News. 14 February 2006. http://www.dailynews.lk/2007/02/14/news01.asp. 
5. ^ ^{a b c} "CSE creates history - ASPI crosses 3,000". The Daily Mirror. 14 February 2006. http://www.dailymirror.lk/2007/02/14/ft/09.asp. 
6. ^ Colombo Stock Exchange broke several records in 2009
7. ^ ^{a b} "Sri Lanka's benchmark stock index close above 3000 points". Lanka Business Online. 13 February 2006. http://www.lankabusinessonline.com/fullstory.php?newsID=1623898214&no_view=1&SEARCH_TERM=13. 
8. ^ Colombo Stock Exchange Reached Record High
9. ^ Sri Lanka shares hit new peak on heavy local buying
10. ^ Sri Lanka stocks at fresh peak after doubling in 2009

External links

• Official Web Site
• Colombo Stock Watch - One click access to information on shares
• Stockinfo - Tools for the Colombo Stock Exchange - Sri Lanka
• Stockit - Sri Lanka
• Stockit Forum - Sri Lanka
• Securities & Exchange Commission of Sri Lanka
• Colombo Stock Market Blog
• Colombo Stock Exchange History Analyzer