Sri Lanka's CSE Reduces Broker Fees. ASPI Crosses 5,000 Point

29th July 2010, www.dailynews.lk, Charumini De Silva

The changes of the market microstructure of the CSE including transaction costs will be active from August 1st.

The crossing threshold will be increased from Rs 10 million to Rs 20 million. The tick size on transactions will be reduced to 10 cents across the board. The threshold for negotiable brokerage will be reduced from Rs 100 million to Rs 50 million.

The minimum brokerage floor will be 0.20 percent.

The biggest beneficiaries of this reduction will be investors transacting less than Rs one million.

Speaking to the Daily News Business Capital Trust Securities, Director Sarath Rajapaksa said this initiative was long overdue.

The revised transaction costs will stimulate trading in the capital market.

The tick size on transactions being reduced to 10 cents across the board will encourage frequent trading. There will be more trading after August. This will also enable large increase in commissions and improve stockbroker’s income, he said. Lanka Securities Chief Operating Officer Kosala Gamage said this regulatory reform was very meaningful as the capital market is performing outstandingly and the country’s economy is stabilizing fast.

“The Government and the regulatory bodies should address to increase the liquidity levels of the market,” he said.

The trading will increase rapidly as frequent tradings will take place after the reforms in the CSE. The foreign investors are pleased with the political and economic stability where the foreign investor confidence has shown a positive trend in the trading.

This will increase the number of foreign and local investor participation in the CSE. These developments in the capital market will affect the country’s economy favourably, he said. Asha Philip Securities Ltd Director/CEO Dimuthu Abeysekera said the revised transaction costs will bring down the stockbroker’s revenue significantly. The stock broking companies started recovering themselves only after the restoration of peace. It would have been better if the regulators give more time to stabilize.
ASPI crosses 5,000 level

The All Share Price Index (ASPI) of the Colombo Stock Exchange (CSE) closed above the 5,000 level for the first time in history yesterday.

The ASPI closed the day at the 5,138.9 gaining 139.8 points (2.8 percent).

The Milanka Price Index (MPI) gained 159.5 points (2.8 percent) to close the day at 5.828.7 also recording the highest level in history. The total turnover recorded during the day was Rs 3.2 billion.

The market capitalization at the end of trading was Rs 1.68 trillion is the highest market capitalization recorded in the history of the CSE.