Commercial Bank appointed a Settlement Bank of CSE's Central Depository System

The Commercial Bank of Ceylon has been appointed a Settlement Bank of the Central Depository System (CDS) of the Colombo Stock Exchange (CSE) following the latter's move towards a multiple bank settlement system.

Consequently, stockbrokers accredited with the CSE will have the option of using the services of Sri Lanka's benchmark private bank for settlements relating to securities traded on the Colombo Stock Exchange.

Welcoming Commercial Bank as the first new bank in the multiple bank settlement system, Mr. Nihal Fonseka, Chairman of the CSE said: "Offering brokers a choice of banks for settlement of transactions is an international best practice that will be welcomed by all those who trade in securities. This is therefore an important milestone in the evolution of the CDS settlement system."

Commercial Bank Managing Director Amitha Gooneratne said: "The Commercial Bank is very pleased to be selected as a service provider to the Central Depository System of the Stock Exchange. Colombo has one of the most dynamic bourses in the region, and we look forward to providing our services to brokers."

A fully owned subsidiary of the Colombo Stock Exchange, the Central Depository System (Pvt) Ltd., acts as the depository for all securities traded on the Exchange and is responsible for the post trade settlement of transactions. It holds securities in trust for holders of securities of quoted companies pending transactions via the Automated Trading System (ATS) and Debt Securities Trading System (DEX) of the CSE.

As a Settlement Bank, Commercial Bank will be responsible for the accepting or transfer of funds relating to trades between the accounts of participants of the CDS.

Settlements under the new multiple bank settlement system will initially take place between Commercial Bank and Sampath Bank, which has been the settlement bank of the CDS for many years.

Settlements through Commercial Bank are scheduled to begin for transactions taking place on 26 October 2009 which are executed by stock brokers who use Commercial Bank as their settlement Bank.

The CSE was one of the first Exchanges in the region to successfully automate its clearing and settlement functions in 1991, with the installation of a Central Depository and an Automated Trading System (ATS) in 1997. This has notably enhanced the transparency and efficiency of the securities market in Sri Lanka.

A total of 232 companies are currently listed on the CSE, representing 20 business sectors with a market capitalization of Rs. 969.6.billion as at 21 October 2009.

CSE gained in thin trade as lending rate cut by state banks

Source- ReutersIndia(By Shihar Aneez)

Sri Lanka's stock market .CSE gained in thin trade on Wednesday, as a lending rate cut by state banks offset concerns of a U.S. insider trading case and a threat to a EU trade concession, dealers said.

The All-Share Price Index of the Colombo Stock Exchange rose 1.02 percent or 30.78 points, but closed 0.3 percent firmer at 3005.72 in thin volume of 318.2 million rupees ($2.77 million). Last year's daily average turnover was 464 million rupees.

Sri Lanka's president on Tuesday ordered state banks to slash lending rates by almost half, after repeated cuts by the central bank failed to bring down the lending rates. [ID:nCOL190249] In line with the rate cut, the benchmark 91-day treasury bill yield fell 60 basis points to an over five-year low of 8.50 percent on Wednesday [ID:nCOL486920].

But, investors continued to stay cautious. The arrest of Sri Lankan-born Raj Rajaratnam, founder of the Galleon Group hedge fund, in New York on Oct. 16, fuelled a 5 percent drop in the first two days of trading last week, given he or Galleon hold large stakes in several blue chip firms.

Also worrying investors is an EU probe that last week found Sri Lanka in breach of human rights laws, which threatens a trade concession from the EU, but the central bank on Wednesday said the move will not hurt exports.

The EU on Tuesday urged Sri Lanka to end impunity over human rights violations and help war displaced people.

Market heavyweight John Keells Holdings JKH.CM rose 1.59 percent to 144 rupees a share.

But, with a 100 percent return so far this year, the CSE is still one of the best performing bourses in Asia.

Buy stocks/shares online via internet

Famous quetion i have been asked several times;"How to do stock market trading on line in sri lanka.?"
The Internet/online-trading has created a huge impact on share market.We can even buy and sell stocks online and traders love having the ability to look at their accounts whenever they want to.
In fact, brokers simply love to do transactions online, without ever having to use the telephone again. Online trading is a cool way to learn about stock markets, without having to ever leaveyour front door to do it.
People can look in a web page for price changes than a projected screen at broker's office.If you aren't IT/internet savvy, this may be a dangerous pursuit for you. Get as much information as you can before you start.
Sometimes, you can find it difficult to get internet access. This means won't always have the ability to get online to carry out your trading business. This is the time when your broker can be helpful, simply call them and request them to make the trade for you. This is a simple way to solve the issue, irrespective if you are a beginner in the stock market or if you are an
advancedplayer. By researching try to find many sites provide a variety of different services e.g.
market news, price data, charts, ‘virtual’ trading accounts and more.
As a rule of thumb, choose to trade with online brokerage companies that have been around forsome time. Also who will give a demostration how to use online interface.
Your comment ar mostly welcome!

Unusual day for CSE

Today(21st-Oct,2009) market showed a unusual behavior.

From last two day market was dropped.

At the start of the day All-Price-index was around 2990.00

and around at 11.10am it drops to around 2850.00.

But then aftr market start recovering and from around 30 minitues

All-Price-index came to 3000.00 point.

see graphs...

All-Price-index;

Milanka-Price-index

The indices at the Colombo Stock Exchange rebounded strongly with the ASPI closing up 35 points (+1.2 percent) to close at 3,019. The key broader index of all shares was down close to 122 points in early morning trade but bounced back as buying came back into the large cap companies.

The more sensitive MPI index was up by 64 points (+1.9 percent to close at 3,391. Turnover for the day was Rs 951 million with John Keells Holdings contributing Rs 104 million to turnover. The diversified conglomerate’s share swung between Rs 135.50 and Rs 144.50, but closed at Rs 140.25. On Tuesday the share closed at Rs 140.00.

Seylan Bank non voting shares closed at Rs 17.25 on turnover of Rs 60 million, while Brown and Company closed at Rs 80.50 on turnover of Rs 49 million. Brown’s dropped to a day low in morning’s trade to Rs 70.50, while Seylan Bank non voting dropped to a low of Rs 15.50. The two telecom operators also witnessed much volatility with Dialog dropping to a low of Rs 6.75 and reaching a high of Rs 7.50, before finally closing at Rs 7.25. Sri Lanka Telecom closed at Rs 45.00 which was its peak price for the day after a low of Rs 41.50

Sri Lanka's stock market(CSE) lost more than 2.8 percent in this tuesday

Today(Oct 20) Sri Lanka's stock market (CSE) lost more than 2.8 percent in early trade, on weak investor confidence after a US insider trading case and economic woes over potential loss of a lucrative EU trade scheme.

The All-Share Price Index of the Colombo Stock Exchange fell 3 percent or 92.53 points to hit a three-week low of 2990.38 at 0641 GMT. It was the fifth straight fall since hitting a record high of 3157.11 points on Thursday.

"Both the potential loss of trade concession from EU and an insider trading scam are heavily weighing on investor confidence," an analyst told Reuters on condition of anonymity.

The European Union on Monday published the findings of an investigation, which has found Sri Lanka in breach of global human rights laws and EU sources said the country is likely to lose concessions worth more than $100 million for its top exports to Europe. [ID:nLJ731429]

Billionaire Galleon Group hedge fund founder Raj Rajaratnam and executives from other U.S. companies were charged on Friday with the largest hedge fund insider-trading scheme ever in the United States. [ID:nN16545101]

Rajaratnam is one of the biggest single investors on the Colombo Stock Exchange (.CSE) and has large stakes in some of Sri Lanka's blue chip shares. On Monday, shares plunged 3.8 percent, before recovering to close 1.56 percent weaker.

Market heavyweight John Keells Holdings (JKH.CM), in which Rajaratnam has an 8.6 percent stake, fell as high as 5.8 percent to 140 rupees a share. It fell 3.26 percent on Monday.

Analysts said the trend would be temporary and the market should recover after another two sessions as the prices of blue chips may fall to an attractive level.

Higher economic growth hopes, more market liquidity, a $2.6 billion IMF loan, an upgraded rating outlook and foreign inflows have overall boosted investor confidence since the end of a 25-year war against the Tamil Tiger rebels in May.

With a return of over 99 percent so far this year, the CSE is still the second-best performing bourse in the world after Peru's Lima's stock market (.IGRA).

Source - Reuters - Tuesday, October 20

Colombo Stock Exchange crash by Arrest of billionaire Raj Rajaratnam

Arrest of world’s richest Sri Lankan, billionaire Raj Rajaratnam felt in Sri Lanka with the Colombo Stock Exchange crash. The Colombo Stock Exchange (CSE) on Monday(19th,Oct 2009) witnessed the biggest fall in the last five years, following the arrest of the Sri Lanka-born New York hedge fund billionaire, Raj Rajaratnam, on charges of “vast insider trading.”

The Central Bank of Sri Lanka (CBSL), however, said the investigations into the Galleon Group hedge fund founder were inconclusive and urged observers and analysts not to jump to conclusions.

Mr. Rajaratnam is the richest Sri Lanka-born U.S. citizen and his firm has a stake in all of the 10 top listed Sri Lankan companies.

He was the icon of rich and powerful in Sri Lanka. Lankan government vowed to investigate the Wharton Business School-educated Rajaratnam’s LTTE links in a witch-hunt.

The Sri Lankan business circles were worried for the conversations about the implications of his arrest on the hundreds of millions of dollars that Rajaratnam had invested in Sri Lanka since 2003, a year after the government signed a truce with the LTTE.

With an estimated return of over 108 per cent so far in 2009, the CSE was the second best performing bourse in the world before the jolt.

Mr. Rajaratnam (52) was among six persons arrested on Friday by the U.S. authorities.

The CBSL in a statement here said, “Investigations are yet continuing in relation to the funding allegedly provided by Raj Rajaratnam to the Tamil Rehabilitation Organisation (TRO). Accordingly, any reports that suggest that such investigations are concluded or that Mr. Rajaratnam has been cleared of possible involvement are incorrect and misleading.”

A report on the Sri Lankan Presidential website has said that Mr. Rajaratnam is one of the wealthiest men in America with an estimated net worth of $1.3 billion and he was a major contributor to the campaigns of Hillary Clinton and also the single largest known U.S. contributor to a charity linked to the LTTE.

About Technologies used in Colombo Stock Exchange

The CSE operates 3 main systems.

• The Central Depository System
• Automatic Trading System
• Debt Securities Trading System

Automated Trading System of the Colombo Stock Exchange

The Colombo Stock Exchange operates a fully fault tolerant distributed architecture Trading System with event driven push technology which provides a robust platform for trading. The system consists of a collective group of programs working cohesively in a distributed environment that delivers the business functionality, which is easily maintainable. The order driven trading platform assures a transparent market and executes trades on price and time priority.

The Local Area Network has built in redundancy with dual network backbones, firewalls and Intruder Detection and Prevention systems for security adds to the robustness of the system. The wide area network also has dual links to broker firms through two independent communication service providers to ensure maximum uptime.

The Trading System commences trading with a pre-open session followed by an auction process for price discovery and proceeds to regular trading. The market is closed with the calculation of average closing price for each security taking into consideration the last one hour’s trading from the last trade.

The Exchange provides 2 mechanisms to process an order of an investor namely the ATS Front End (TFE) that has been provided by the Exchange to Broker Firms to input orders and the ATS Interface (ATSI) which interface third party order routing systems to the Trading System. Broker back office systems and broker internet order processing applications are interfaced to the trading system through the ATSI gateway.

The ATS Market Watch Front End (MWFE) provides the same facility as the TFE without the order entry function. The MWFE is provided to the Broker Firms and other market participants to monitor the market movement. An enhancement to the above is a Front End with automatic scrolling capability. This consists of two separate windows.

One window displays all trade executions whilst the other window displays security details. The screens scroll automatically and are updated dynamically. This facility is available at the Exchange and Broker Firms for investors to view trade executions and security statistics.

Why we should invest in Shares?

Let's see what are the benefits of Investing in Equity

• Capital Gains
  This is when a share's selling price exceeds its initial purchase price. If the selling price falls beyond the purchase price, you would make a capital loss. Capital Gains are free of tax.
• Dividends
  A company may decide to payout a portion of its earnings to shareholders. But companies are not required to pay dividends.
• Rights Issues
  The company may extend this privilege to existing shareholders to buy shares at a specified and usually discounted price, usually in proportion to the number of shares already owned.
• Distribution by the company
  Shares shall be offered to the holders of existing shares in a manner which would, if the offer was accepted, maintain the relative voting and distribution rights of those shareholders.
• Liquidity
  Shares quoted on a stock market are generally liquid. Therefore, they can be sold easily and you can get your money back in a few days.
• Higher Returns
  In the longer term, shares have ensured a higher return to investors.
• Hedge against inflationShares are a good investment in an inflationary environment, since share prices increase to protect investors from the effects of inflation.


• Collateral
  You may also use your shares as collateral against loan facilities to banks.
  

How to buy and sell shares in Colombo share market?

If you are NOT buying from Primary market (from a new issue -IPO) you should go through your Stockbroker
On the Secondary market an investor could either buy from or sell to another investor, subsequent to the original issuance in the primary market.
You must first find yourself a stockbroker /custodian bank and open a CDS account through that participant.

Once they confirm your CDS account number, you can contact your broker through

• Phone


• Fax


• Personal visit or


• The Internet (online trading)
  to trade in the secondary market.

You must clearly instruct your broker of the

• Name of the company


• Number of shares &


• The price

of the shares which you wish to buy or sell.

How Overseas Investors invest in The Colombo Stock Exchange (CSE)

Are you a foreign invester who is interested to invest in SriLanka share market?
The Colombo Stock Exchange (CSE) is a liberalized exchange and permits both non-nationals and expatriate Sri Lankans an opportunity to invest and also repatriate their investments and profits efficiently.
Overseas investors who wish to repatriate their investments and profits are required to open a Share Investment External Rupee Account (SIERA) with a Commercial Bank operating in Colombo to facilitate these transfers.
SIERA (Share Investment External Rupee Account)
The SIERA is a transactional account used for the purpose of making investments in Sri Lanka using foreign currency. The Investor who brings in foreign currency is permitted to repatriate the investment and profit without specific exchange control approval.
Documentation required to open a Share Investment External Rupee Account (SIERA)
1. Account opening forms and signature cards2. Copy of Passport3. Letter of Introduction
The following transactions could be routed through the SIERA
Debits
1. Payments for investments2. Debits in respect of the account holder's expenses in Sri Lanka3. Payments to brokers and bank charges4. Debits in respect of outward remittances of dividends and sale SSproceeds of shares and units of permitted unit trusts5. Funds payable pertaining to Stock borrowing and Lending SStransactions.
Credits
1. Inward remittances or NRFC/ FCBU transfers of the investor.2. Sales proceeds of shares and units of permitted unit trusts SSsupported by documentary evidence3. Dividend paid on shares supported by documentary evidence4. Commissions relating to item 2 and 3 above supported by SSdocumentary evidence.5. Funds received from participating in Stock borrowing and SSLending transactions.

Stock Brokers

The Colombo Stock Exchange (CSE) has fifteen (15) stock brokering firms, that offer brokering services to clients. Contact these companies as listed below..


Amana Securities Ltd

Asia Securities (pvt); Ltd

Bartleet Mallory Stockbrokers (Pvt) Ltd

Capital Alliance Holdings Ltd

Ceylinco Stockbrokers (pvt); Ltd

CT smith Stockbrokers (pvt); Ltd

DFCC stockbrokers (pvt); ltd

DP Global securities (pvt); Ltd

First Capital Ltd

HNB Stockbrokers (pvt); Ltd

JB Securities (pvt); Ltd

John Keells Stockbrokers (pvt); LTD

Lanka Orix Securities (Pvt) Ltd

Lanka Securities (Pvt); Ltd

MMBL Phillip Securities Ltd

NDBS Stockbrokers (Pvt) Ltd

SC Securities (pvt); Ltd

Seylan Merchant Bank Ltd

Somerville Stockbrokers

Taprobane Fund Management Ltd

CSE - Online Trading / Internet Trading

This is the big topic we are going to talk about. We believe Internet Trading is about empowering the individual investor. Since nowadays internet is easy access resource Online Trading will be the future of stock exchange.
An online investor gains convenience and saves time with direct access (through the stockbroker) to the trading system and 24-hour access to market information. But this depends on how much sophisticate your broker’s website is. Investors can rest assured if the system is fully secured.
As listed in CSE official website, Internet Trading at the CSE is facilitated via eighteen broker Firms. They are as follows:

• Acuity Stock Brokers (Pvt) Ltd
  
  Via http://www.cdax.lk/

Via http://www.cdax.lk/ - (Asia Securities. Asha Philip Securities. Ceylinco Stock Brokers. Lanka Securities. Acuity Stock Brokers.Capital Alliance. SMB Securities .)

• Amana Securities Ltd
  Via http://www.asl.lk/


• Asha Phillip Securities (Pvt) Ltd.
  Via http://www.ashaphillip.net/


• Asia Securities (Pvt) Ltd.
  Via http://www.asiacapital.lk/


• Bartleet Mallory Stockbrokers (Pvt) Ltd
  Via http://www.bartleetstock.com/


• Capital Alliance Securities (Pvt) Ltd
  Via http://www.capitalalliance.lk/


• Ceylinco Stockbrokers (Pvt) Ltd.
  Via http://www.ecsbl.com/


• CT Smith Stockbrokers (Pvt) Ltd
  Via http://www.ctsmithonline.com/


• DP Global Securities (Pvt) Ltd
  Via http://www.dpgsonline.com/


• First Guardian Equities (Pvt) Ltd
  Via http://www.firstguardianequities.com/


• HNB Stockbrokers (Pvt)Ltd
  Via http://www.hnbstock.com/


• JB Securities (Pvt) Ltd.
  Via http://www.jbs.lk/


• John Keells Stock Brokers (Pvt) Ltd
  Via http://www.jkstock.keells.lk/


• Capital Trust Securities (Pvt) Ltd.
  Via http://www.capitaltrust.lk/


• Lanka Securities (Pvt) Ltd
  Via http://www.lsl.lk/


• S C Securities (Pvt) Ltd
  Via http://online.sampathsecurities.lk/scswts/


• SMB Securities (Pvt) Ltd
  Via http://www.smblk.com/


• NDB Stockbrokers (Pvt) Ltd
  Via http://online.ndbs.lk/

Getting Started - How to buy Shares in Colombo Stock Exchange

Before this article you can read my previous post here..
Are you still confused with how to get started “investing” in Stock Exchange? We will try to explain you the process you should follow as simple as possible. But still you need to put some hard work to learn basics till you get familiarize with the process.
Steps: Individual Investors (Domestic)
Step 1: Normally four (4) forms namely CDS 1, CDS 1 (A) CDS 1 (B) & broker’s form has to be obtained through the broker or downloaded.
Step 2: All four forms have to be filled by the client.
Step 3: A signed copy of the National Identity Card or Passport should be enclosed with the form and submit to the broker. Also relevant utility bills should be attached as proof of residency. Then they will take care of it and will inform you.

How do you purchase shares?
There are two ways to purchase shares ..

• From a new issue of shares (Primary Market),The primary market is the market for new shares or debenture issues. Simply purchasing directly from the issuer (company). In a primary issue, the company offering the share/debenture issue publishes a document known as the prospectus. It is an invitation to the general public to buy shares or debentures of that company.
  
• On the Secondary Market through a stock broker.A market in which an investor could either buy or sell shares, debentures and Government Securities from or to another investor, subsequent to the original issuance in the primary market.

Is CDS safe?Almost yes, since CDS has taken measures to ensure the security of your shares. The company has back up facilities and procedures that would ensure business continuity in the event of anything happening either to the computer system or its usual premises. more at: Colombo Stock Exchange (Website: http://www.cse.lk/)
Good Trading!