Capital Market to Contribute 50pct of Sri Lanka's GDP by 2016. Present Contribution is 30pct of GDP of $ 60bn

04th April 2013, www.dailynews.lk, By H DH Senewiratne

The capital market is expected to contribute US $ 50 billion for the country’s GDP by year 2016, therefore the Stock Brokers should be geared to handle the highest number of deposits in the future, Director General Security and Exchange Commission (SEC) Dr Nalaka Godahewa said.

“Sri Lanka’s GDP would be US $ 100 billion by 2016, out of which 50 percent should contribute from the capital market. Therefore, each stock broker should be geared to manage many retail accounts, “Dr Godahewa said at the launch of the Colombo Stock Brokers Association website and also introduced code of principles of best practices at the event.

He said that right now the country’s total GDP was US $ 60 billion and the capital market’s contribution to the GDP was only 30 percent.

There are more than 220,000, accounts in the Capital Depository System, he said.

“At present the country has 29 stock brokering companies, each company should be geared to manage at least 20,000 retail deposits. Therefore all stakeholders should work together to make a vibrant stock market to achieve that target.

To popularize the capital market education aspect plays a pivotal role because our present market is a speculative market than the research base market,” he said.

” When the foreign investors are investing in Sri Lanka they have little knowledge on few companies.

Therefore, research on companies would help to create a vibrant and strong market in the country.

“With the stability in the market, the debt market has performed well, better than we expected. Therefore, we have to find ways and means to face future challenges to make a vibrant market,” he said

The President of the Colombo Stock Brokers Association (CSBA) Dimuthu Abeysekera said that in developing a vibrant equity market, the role of stockbrokers is crucial and into this equation comes the tenets of transparency and enhancing effectiveness across the market.

He said that facilitating a customer centric solution in securities trading in Sri Lanka would be a primary objective for the stock broking community, while maximizing financial returns for the broader investor community by proving prudent timely information,” he said.

“Colombo Stock Exchange is showing stability at present and the development of the overall capital market by introducing Principles of Best Practice that would help to promote the professionalism to the market,” he said.

Related Info :

• Sri Lanka Stockbrokers Unveil Website & Ethics Code. 18 Months of Decline Ending with Stability Brought back to the Market

• Rs 45bn Raised in 2011 via IPO’s & Rights Issues by Sri Lankan Firms

• Regional Firms to List in Sri Lanka. Atlease 2 Firms from Maldives May List before Year End

Colombo Stock Exchange to Have Locked Accounts After Going Scripless

16th December 2010, www.lankabusinessonline.com

Sri Lanka's Colombo Stock Exchange will create locked accounts for shareholders of listed firms who do not wish to trade after the bourse goes scripless, a statement said.

The accounts in the CSE's Central Depository Systems are part of a move to fully dematerialise all listed securities by converting all paper-based physical share certificates into electronic form, it said.

"The CDS would introduce a facility for shareholders of listed securities who would not wish to trade their securities, to 'lock' their securities in a separate locked balance in their own CDS accounts."

Once securities are 'locked' they would not be visible to CDS participants like stock brokers and custodian banks, maintaining the confidentiality of the information and safeguarding shareholders from unauthorized transactions by stock brokers.

Trading on locked balances would be suspended, the statement said.

Securities could be 'unlocked' from a locked balance and transferred to the trading balance of the CDS account holder only with the written authority given by the CDS account holder to the CDS through stock broker and custodian banks.

Withdrawals from the CDS would be allowed for mortgaging of securities, the CSE said.

CDS account holders having securities deposited in locked balances in their CDS accounts would receive a separate statement every month.

The markets regulator, the Securities and Exchange Commission, has made it mandatory for securities of new listings to be in electronic form from January 01, 2011.

All applicants for initial public offers which open for subscription on or after January 01 will have to open CDS accounts and indicate their CDS account numbers in the IPO application form.

"The company secretary and registrar would not issue securities certificates to the applicants who do not have valid CDS accounts," the CSE statement said.

Shareholders of existing listed companies which got listed before January 01, 2011 will be given to a year from January 01 to convert their shares into electronic form.

APTA May Offer Sri Lanka Concessions with a Supportive India

24th October 2010, www.thesundayleader.lk

The three giants in the Asia Pacific Trade Agreement (APTA), namely Korea, India and China are prepared to recognize Sri Lanka (SL) as a Least Developed Country (LDC) and give it a near zero (90%) duty concessionary entry into their markets on an average under certain tariff lines, a Commerce Department (CD) official said.

CD Director General Gomi Senadheera speaking at a seminar on Trade Agreements (TAs) on Monday said that currently the duty concession is around 20%.

However reaching a consensus under the 4th round of APTA talks which would make these concessions a reality has been delayed due to disagreements by India, but those disagreements are not with SL, he said.

SL exported about US$ 50 million worth of goods to APTA (formerly Bangkok Agreement) member countries last year. China topped the list with US$ 29 million, followed by India (US$ 13 million) and Korea (US$ six million).

Coir products were the island’s biggest export with US$ 24.5 million followed by natural rubber (US$ 14.5 million). Other exports under APTA included rubber products, fish “products,” floor tiles and tea.

APTA is the biggest trade agreement after the Indo-Lanka Free Trade Agreement (ILFTA), said Senadheera.

The objective of APTA is to cover at least 40% of tariff lines.
But studies have shown that Sri Lanka has under-utilised APTA concessions by 50%, he said.

CD plans to educate exporters about APTA.

Senadheera’s talk however didn’t cover the EU and US markets, SL’s number 1 and number 2 export destinations respectively.

Exports to the EU have been hit due to the withdrawal of the GSP + concession, while certain exports to the USA are under threat because of the labour GSP issue.
“There are a large number of exports made to the USA which could enjoy the GSP duty free concession, resulting in the saving of millions of dollars in duties,” said Senadheera. This ignorance is either on the part of the exporter, or of the importer, he said.
A number of these concessions are tied to the rules of origin criterion, ie the requirement of a minimum local value addition. For instance under APTA, the local value addition should be a minimum of 45%.

Senadhira said that GSP are non-reciprocal concessions/TAs. Other TAs touched upon by Senadhira in his speech were the ILFTA, Sri Lanka-Pakistan FTA (smoked rubber sheets topped the list last year with US$ 10 million worth of exports under this agreement), South Asian Preferential Trade Arrangement (under which arrangement SL made US$ 1.77 million worth of exports last year) and South Asian FTA (some US$ 608,624 worth of exports to India and Pakistan last year, including US$ 579,420 worth of ekel broom sticks to Pakistan). The seminar was organized by the Spices and Allied Products,’ Producers’ and Traders’ Association. (See also page 37)

Ravi Ratnayake, Director, Economic and Social Commission for Asia and the Pacific, Trade and Investment Division says intra-regional trade can play a large role in reducing poverty, but barriers to trade among the region’s developing countries remain relatively high. “By simply eliminating all tariffs among each other, the region can reduce the number of people living on less than $1 a day by 43 million.” (Source: ESCAP)

The three giants in the Asia Pacific Trade Agreement (APTA), namely Korea, India and China are prepared to recognize Sri Lanka (SL) as a Least Developed Country (LDC) and give it a near zero (90%) duty concessionary entry into their markets on an average under certain tariff lines, a Commerce Department (CD) official said.
CD Director General Gomi Senadheera speaking at a seminar on Trade Agreements (TAs) on Monday said that currently the duty concession is around 20%.
Related Info:
Sri Lankan Exporters Should Make Use of Free Trade Deals

How to Invest in Sri Lanka Government Securities - Treasury Bills and Bonds

Sri Lanka Treasury Bills and Bonds attract foreign investors for a number of reasons. Prime among them are the stability of the booming economy of Sri Lanka and the higher interest rates offered on these government debt instruments compared to similar securities from other countries especially US and Europe. Sri Lanka Treasury Bills and Bonds are Tax Free as withholding tax is charged at source. Pl See: Current Rates on Treasury Bills and Bonds - Central Bank of Sri Lanka 

What is a Treasury Bill?
Treasury bill is a short term debt instrument of 3, 6 or 12 Months issued by the Government of Sri Lanka. Treasury Bills are discounted instruments - the investor pays the discounted value (investment value) and receives the face value on maturity. Government issues Treasury Bills through weekly auctions and interest is decided based on the bids received.

What is a Treasury Bond?
Treasury Bond is a medium to long term debt instrument of 2 to 20 Years issued by the Government of Sri Lanka. Treasury Bond carries a coupon (interest) which is paid on a half yearly basis, and the principal is repaid on maturity.

What is Sri Lanka Development Bond?
Sri Lanka Development Bonds (SLDBs) are a debt instrument denominated in US Dollars issued by the Government of Sri Lanka. Interest is paid to the holder every six months and the principal repayment is made at the end of the maturity period. Calculation of interest payments will be based on the six month London Inter Bank Offered Rate (LIBOR) for USD per annum plus a margin determined through competitive bidding at the auction.

Who Issues Treasury Bills/Bonds?
As an Agent of the Government of Sri Lanka, the Public Debt Department of the Central Bank of Sri Lanka (CBSL) issues the Treasury bills and Treasury Bonds, and in the case of Treasury Bills repays maturity proceeds on maturity, and for Trasury Bonds pays interest on due dates and repays the principal on maturity.

Types of Government Securities
• Rupee Denominated Securitie
• Treasury Bills : Available to foreign investors, Sri Lankan diaspora living/working abroad and Sri Lankan citizens.
• Treasury Bonds : Available to foreign investors, Sri Lankan diaspora living/working abroad and Sri Lankan citizens.
• Inflation-linked Bonds : Available only to Sri Lankan citizens.
• Foreign Currency Denominated Securities
• Sri Lanka Development Bonds : Available to foreign investors, Sri Lankan diaspora living/working abroad and Specified Companies.

How to Invest in Government Securities?
Investors can purchase Treasury Bills/Bonds either from auctions in the primary market through a designated Primary Dealer (PDs) on specified dates, or from the secondary market through Primary Dealers, Commercial Banks or the Joint Lead Managers in the case of Sri Lankan Diaspora business on any week day.

Can I Invest in Treasury Bills/Bonds?
Yes, if you are one of the following,
a) Foreign institutional investors such as foreign country funds, mutual funds and regional funds.
b) Corporate bodies incorporated outside Sri Lanka.
c) Citizens of foreign states.

What are the Main Features of Treasury Bills?
• Risk free, gilt edged debt instrument
• Short term debt instrument (3 to 12 months)
• Maturity proceeds (Face value) will be paid on maturity
• Yield rates are determined by the market
• Tradable instrument in the secondary market
• Issued in scripless form

What are the Main Features of Treasury Bonds?
• Risk free, gilt edged debt instrument
• Maturities are available with 2-20 years
• It carries half yearly coupon payments and the principal is repaid on maturity
• Yield rates are determined by the market
• Tradable instrument in the secondary market
• Issued in scripless form

What Benefits Can I Derive by Investing in Treasury Bills/Bonds?
• It is an absolutely risk free investment, since it is issued by the sovereign government. Hence, they are called gilt-edged securities meaning that they are covered by gold.
• You can get the highest rate of interest since the yield rates are determined in the market.
• Since these bills/bonds are tradable in the secondary market, you can obtain instant liquidity by selling them in the market.
• All receipts of interest, maturity proceeds and capital gains are fully repatriable.
• You could also have a joint investment with some other person or persons. Hence, it is a very good way to share your investments with loved persons.
• You are not subject to further taxation, since a withholding tax of 10 percent is charged at source is the final tax.
• No stamp duty is payable on these bills/bonds.
• You can get the best service from the CBSL which maintains your investment in its state of the art, Scripless Security Settlement System and the fully automated Central Depository System (CDS).

What is the Availability of Treasury Bills/Bonds to a Foreign Investor?
• Foreign investors can purchase up to 10% of the total outstanding Treasury Bills or Bonds at any given time.

According to Central Bank data foreign investors held Rs 212 billion of bonds up from Rs 199 billion on January 04 2012. Treasury bills holdings rose to Rs 84.5 billion from Rs 70.1 billion in the same period there amid periodic changes.

How Can I Apply for Treasury Bills?
• You can purchase Treasury bills at any time through Primary Dealers (PDs) or Licensed Commercial Banks (LCBs) registered with the CBSL. PDs are the institutions appointed by the CBSL for trading in Government securities. Contact details of these institutions are given below.
• You can purchase Treasury bills by sending bids to the primary auctions through PDs or through direct placements.
• In order to make arrangement for fund transfers, you can advise your own bank to open a Rupee account named “Treasury bill Investment External Rupee Account - 2 (TIERA - 2)” in an LCB in Sri Lanka. (Note: Securities Investment Accounts (SIA) replace TIERA-2).
• After completing the transaction, your agent (LCB/PD) will open a security account for you in the CDS maintained by the CBSL. This account is debited /credited simultaneously based on your tradings in the market.

How Can I Apply for Treasury Bonds?
• You can purchase Treasury bonds at any time through Primary Dealers (PDs) or Licensed Commercial Banks (LCBs) registered with the CBSL. PDs are the institutions appointed by the CBSL for trading in Government securities. Contact details of these institutions are given below.
• You can purchase Treasury bonds from the secondary market or you can even send bids to the primary auctions through PDs.
• In order to make arrangement for fund transfers, you can advise your own bank to open a Rupee account named “Treasury bond Investment External Rupee Account (TIERA)” in an LCB in Sri Lanka. (Note: Securities Investment Accounts (SIA) replace TIERA).
• After completing the transaction, your agent (LCB/PD) will open a security account for you in the CDS maintained by the CBSL. This account is debited /credited simultaneously based on your tradings in the market.

What is Primary Market?
• Information on auctions for Treasury Bills and Treasury Bonds are normally announced in the leading newspapers at least two days prior to the auction date.
• Treasury Bond series available for foreigners are announced by the Public Debt Department via e-mail to all participants in the Central Depositary System.
• In the case of Treasury Bills, newspaper advertisements are published on every Monday and the auctions are held on Wednesdays. Bids are accepted through the fully automated online bidding system.
• Treasury Bills are issued weekly, while 3-4 Treasury Bond auctions are held every month based on the Government's cash requirement.
• All investors who are willing to participate in primary auctions should submit their bids through Primary Dealers before 11 a.m. on the auction date which is the Primary Dealer's deadline for submission of bids to auction. The successful bidders are informed within two hours of the deadline for the submission of bids. Press releases are published in leading newspapers on the following day.
• Settlement of successful bids in the primary market is on two business days after the auction date (T+2). Sri Lanka Government debt securities are scripless and therefore securities transfers take place on an electronic basis. Settlement is via the electronic payment system and the Real Time Gross Settlement System on a delivery vs. payment basis.
• Investors are required to maintain accounts with Commercial Banks or Primary Dealers for cash settlement for their transactions as well as for the crediting of coupon payments. Ownership of securities is recorded in the Central Depository System maintained by the Central Bank of Sri Lanka.

What is Secondary Market?
• An investor can either hold a tradable security until maturity or sell in the secondary market prior to maturity at the current market price.
• Investors can also buy tradable securities already issued to the market by the Central Bank of Sri Lanka.
• Primary Dealers/Commercial Banks quote buying and selling prices of Treasury Bills, Treasury Bonds daily for different maturities. Investors can shop around and bargain to obtain attractive market rates for these securities.
• Sri Lankan Government debt securities are scripless and the securities transfer is done on an electronic basis. In the Scripless Securities Settlement System (SSSS) transfer instructions are carried out on a trade-by-trade basis, with the transfer of securities and the transfer of funds for payment taking place simultaneously.

Who are Primary Dealers?
Primary Dealers are institutions appointed by the Central Bank of Sri Lanka for marketing government securities in the secondary market. Primary Dealers are also responsible for supporting the primary auction and are the major participants in the competitive bidding process. Primary Dealers are required to provide liquidity in the secondary market by quoting bid and offer yields for government securities.

How Can I Collect Maturity Proceeds?
• Interest (for Treasury Bonds) and Maturity proceeds (for both Treasury Bills and Bonds) relating to Treasury Bills/Bonds are credited on due dates directly to your account through your agent. The participants of the CDS are responsible to pay dues to you on due dates.

How do I Get More Information on Treasury Bills/Bonds?
• Details on available Treasury Bills and prevailing market rates can be obtained from LCBs, PDs and CBSL Website (www.cbsl.gov.lk)
• Details on current auctions can be obtained from PDs and LCBs.
• Any detail on this scheme can be obtained from the Public Debt Department of the CBSL.
Telephone: 94 11 2 477277 /212 /274//276 /278/316
Fax: 94 11 2477718/719/759
e-mail: pddrbw@cbsl.lk

List of Participating Agents - Licensed Commercial Banks (LCBs) and Primary Dealers (PDs)
• List of Licensed Commercial Banks (LCBs)
• List of Primary Dealers (PDs)

Market Information - Primary Market
• Last Treasury Bill Auction (Press Release)
• Last Treasury Bond Auction (Press Release)
• Treasury Bill Auction Historical Data (1996-2009)
• Treasury Bond Auction Historical Data (1997-2009)

Market Information - Secondary Market
• Two Way Quotes and Market Rates for Treasury Bills and Bonds. Please see latest Weekly Economic Indicators.

Additional Information on Treasury Bills and Treasury Bonds
• Available Treasury Bond Series
• Sri Lanka Development Bonds - Latest Issue
• Outstanding Government Debt Stock - Monthly Economic Indicators
• ‘LankaSecure’ - Scripless Securities Settlement System (SSSS) and CDS
• Exchange Rates

• Treasury Bills for Foreign Investors
• Treasury Bonds for Foreign Investors
• Treasury Bills and Bonds for Sri Lankan Diaspora

Related Info :
• Securities Investment Accounts (SIA) Replace SIERA & TIERA Accounts - For Investment in Sri Lankan Equity, Debt and Unit Trusts
• Sri Lanka Offers Special Visas to Investors, Professionals & Senior Citizens

How to Invest in Sri Lanka Equity Market - Colombo Stock Exchange, the Best Performing Capital Market of the World

HOW TO INVEST IN COLOMBO STOCK EXCHANGE (CSE)
The Colombo Stock Exchange (CSE) became the best performing capital market in the world recording a growth of 111.14 percent. All Share Price Index (ASPI) of the CSE and Milanka Price Index (MPI) both have crossed 7,000 milestone creating history. (2nd October 2010).

Institutions incorporated outside Sri Lanka and individuals resident outside Sri Lanka inclusive of Sri Lankan residents out side Sri Lanka are permitted to buy and/or sell shares in a listed company of Colombo Stock Exchange up to 100% of the issued capital of such company.

PROCEDURE FOR INVESTMENT AND REPATRIATION OF PROCEEDS FOR NON RESIDENTS
Investment in shares in Sri Lanka and repatriation of proceeds should take place through Share Investment External Rupee Accounts (SIERA) opened with licensed commercial banks, which are appointed as Authorized Dealers in foreign exchange under the Exchange Control Act.

Individuals resident outside Sri Lanka (inclusive of Sri Lankans resident outside Sri Lanka), approved regional funds, approved country funds as well as corporate bodies incorporated outside Sri Lanka are permitted to open SIERA accounts. (Note: Securities Investment Accounts (SIA) replace SIERA).

Read more...

GETTING STARTED - COLOMBO STOCK EXCHANGE (CSE)
• How do you purchase shares
• Types of securities traded at the CSE
• What is Central Depository Systems (Pvt) Ltd?
• How do I open a CDS account?
• What is the purpose of my CDS account?
• What is the reason for holding my securities in scrip-less form?
• Who are stockbrokers?
• Can I use a different broker from the one I have been using?
• How Safe Is CDS?
• Read more...

HOW TO FIND A STOCK BROKER
• Who is a Stockbroker?
• What services do they provide?
• What are their fees?
• Members of CSE (List of Stock Brokers)
• Read more...

INVESTING IN SHARES
• What are the types of shares?
• Benefits of Investing in Equity
• How do you buy/ sell shares?
• Read more...

TRADING SYSTEMS
• The Automated Trading System (ATS)
• The Debt Securities Trading System (DEX)
• The Boards
• Read more...

TRADING SESSIONS
The Exchange is open for continuous trading from Monday to Friday from 9.30 a.m. to 2.30 p.m.

Secondary trading of corporate and government debt securities through the DEX takes place from 9.30a.m. to 12.30p.m.
Read more...

TRANSACTION COSTS
• Transaction cost applicable for equity & debt securities
• Read more...

TRADING PROCESS
• Diagram

CSE - EQUITY MARKET
The CSE offers a variety of tools to help market professionals and investors monitor trading activity and keep the pulse of the market.
• Daily market summary
• Share price list
• Market Indices
• Total Return Indices
• Sector-wies market summaries
• Market capitalisation of listed companies
• Trading statistics
• Reserch papers
• Read more...

Stock Markety Report - Daily
Stock Markety Report - Weekly

MyCSE
MyCSE offers additional features such as live market information for the stocks in your portfolio, etc.
Read more...

CSE - DEBT MARKET
The Colombo Stock Exchange (CSE) has facilities for the secondary trading of Corporate and Government Securities. A separate trading system (DEX) and a separate clearing and settlement mechanism is in place for debt securities. Presently 69 corporate debt securities are listed on the CSE. All Government Debt is tradable through the DEX system.
Read more...

CSE - DERIVATIVES MARKET
• Read more...

ADDITIONAL INFORMATION• Investnow.lk - Best place to discuss matters concerning the Colombo Stock Exchange
• Colombo Stock Exchange on Wikipedia
• Securities & Exchange Commission of Sri Lanka
• The Stock Market in Sri Lanka: An Investment Opportunity Outlook for 2009 and Beyond
• Stocks in Sri Lanka are "the only equities" Jim Rogers would "consider buying at the moment" - Bloomberg newswire report
• “If I weren’t here, I’d be on a plane to Sri Lanka" - Jim Rogers on wonderful opportunities in Sri Lanka
• How to Pick Winning Stocks
• Share Valuation - Risks & Returns

Related Info :
• Securities Investment Accounts (SIA) Replace SIERA & TIERA Accounts - For Investment in Sri Lankan Equity, Debt and Unit Trusts
• Sri Lanka Offers Special Visas to Investors, Professionals & Senior Citizens