Friday, October 30, 2009
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.