Johannesburg Stock Exchange Powered by MillenniumIT, Sri Lankan Firm Acquired by London Stock Exchange Group

08th February 2011, www.island.lk

The Johannesburg Stock Exchange (JSE) announced that it has concluded a licensing agreement with technology solutions provider MillenniumIT to move its equity market trading activity onto Millennium Exchange. The migration is planned for the first half of 2012 and it is expected that JSE members will benefit from executing transactions almost 400 times faster than the present trading solution. Founded in 1996, and headquartered in Colombo, Sri Lanka, MillenniumIT was acquired by the international diversified exchange business London Stock Exchange Group in October 2009.

The agreement will also see the JSE’s trading system relocated from London to Johannesburg, enhancing operational efficiencies and ensuring trading optimisation for market participants.

Leanne Parsons, JSE Chief Operating Officer and Head of the Equity Market comments on the agreement: "We are excited about working with MillenniumIT and providing benefits to our market using their technology solutions".

Parsons is confident that the adoption of the new trading system will increase the equity volumes traded on the JSE and therefore liquidity: "In our experience, whenever we take a step forward with our trading technology, trading volumes also follow. If we want to remain a world-class and relevant exchange in a highly competitive industry, we must remain abreast of technological advances."

Trading volumes increased significantly when the JSE adopted trading platform JSE SETS in 2002, and climbed again when the exchange moved to the present trading platform JSE TradElect in 2007. JSE TradElect is licensed from the London Stock Exchange, with the London bourse maintaining and operating the platform under the current technology services agreement with the JSE. Parsons adds that the adoption of Millennium Exchange could potentially have a significant impact on trading volumes by attracting a greater share of high frequency trading. "There is much anecdotal evidence to suggest that when exchanges increase their trading speeds they also boost levels of high frequency trading. This is important in order to deepen a market," adds Parsons.

MillenniumIT, which has over a decade of experience in building technology solutions for the capital markets, is headquartered in Colombo, Sri Lanka and is a wholly-owned subsidiary of the London Stock Exchange Group (LSEG). Millennium Exchange is the company’s flagship product used by ten exchanges and other execution venues worldwide and is known for its speed and scalability. "Millennium Exchange is a next generation trading platform that offers ultra fast order processing capabilities, providing users with a trading experience that is amongst the fastest, most reliable and technologically advanced in the world," comments Tony Weeresinghe, CEO of MillenniumIT and Director of Global Development at the LSEG.

Speed is becoming increasingly important in the exchange industry as exchanges cope with the rapid rise of high-frequency trading. Those exchanges that have trading systems with the lowest latency – the time between when an order is received, processed and acknowledgement sent – will retain and grow market share. "Low latency trading systems with latencies in the microseconds will soon become a commodity," adds Weeresinghe.

Parsons explains that one of the reasons for the decision to relocate the trading engine to Johannesburg was for the increased operational stability that this move would offer. "The handful of incidents that we have had requiring the equity market to be halted, with reputational impacts, have been related to our international connectivity links. By moving the engine to Johannesburg, we eliminate this problem and are able to offer our clients improved service availability and stability."

The move will mean that the JSE will manage and operate the trading engine itself. Parsons adds that operational costs will remain roughly the same. While not willing to disclose the value of the agreement, she comments that the structure of the deal allows the JSE to aggressively grow trading volumes without incrementally increasing trading software costs.

The move also offers significant benefits for the JSE itself and opens up a new potential revenue stream for the exchange by offering JSE members co-location services. Co-location allows trading firms to place their computer servers near an exchange’s matching engine to cut the time it takes for messages to be sent to and from the trading engine – thus shaving microseconds off trading times and reducing bandwidth requirements. Many exchanges worldwide currently earn revenue from renting out computer space in co-location centres. The move of the trading system to Johannesburg has been welcomed by market participants and will give JSE members faster trade executions.

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Spotlight on Sri Lanka Drives up UK Trade & Invest in Sri Lanka

20th November 2010, www.island.lk, By Sujeeva Nivunhella

The Sri Lanka High Commission, London together with the UK – Trade & Investment Northwest and the Greater Manchester Chamber of Commerce participated in a " Spotlight on Sri Lanka " event in Manchester which featured the 21-member delegation from the Hambantota District Chamber of Commerce on the November 3.

The event, attended by UK Business and Industrial Companies, was jointly organized with the assistance of the UKTI and the Greater Manchester Chamber of Commerce. Azmi Thassim, Chief Executive Officer of the HDCC, briefed the gathering on the rising investment sectors open for Foreign Direct Investment and private public partnership and joint ventures in the Hambantota district.

He also emphasized the links forged between the HDCC and the Greater Manchester Chamber of Commerce which won the best networking award for working partnership established between Manchester Solutions, the Greater Manchester Chamber of Commerce (UK) , especially since the Tsunami hit Sri Lanka in 2004.

The UK Company, Manchester Solutions presently provides technical assistance to the HDCC towards strengthening its capacity to play a major role in the Economic Development Strategy for the Hambantota District. The Trade Section of the Mission provided a detailed presentation on Business Opportunities in Sri Lanka followed by a case study on Doing Business in Sri Lanka by UK Company M/s. Cargo Overseas which had established a branch office in Sri Lanka in August last year.

The UKTI North West focused on the prospects for attracting commercial opportunities in the industrial regions of Manchester, Merseyside, Cheshire, Lancashire, Cumbria which consists of over 250,000 businesses, has a population of 7 million and is ranked No. 2 International trade region in England.

Considering the importance of the North West of England as comprising a larger economy than around 10 EU State, this is the second consecutive time the Sri Lanka High Commission has concentrated in holding the "Spotlight on Sri Lanka" event in Manchester since the visit of Prof. G.L. Peiris as the then Minister of Export Development and International Trade to the region last year.

The Sri Lankan High Commission also hosted a networking reception with UK Business and Chambers of Commerce representatives for the HDCC delegation. The High Commissioner, Nihal Jayasinghe welcoming the delegation noted the pioneering nature of its establishment since 1990, its incorporation as a district chamber in 1993 ,the strategic and pivotal role it could play in the mega development and economic projects taking place in the Hambantota District.

He noted: "Today, with the dawn of peace, we are seeing a great momentum in the interest to trade and invest in Sri Lanka.

The frequency of outward business delegations to Sri Lanka has increased. UK has become the second largest market for tourists next to India, accounting for 30% of local tourist related earnings in Sri Lanka. Last Year, UK was the second largest investor in Sri Lanka at US$80 Million with total imports from Sri Lanka recording US$ 1,024 million as the second major overseas Buyer next to the USA.

British-Sri Lanka Chamber of Commerce Established in London

04th October 2010, www.island.lk

Heralding the propulsion of trade interests between Britain and Sri Lanka, the British – Sri Lanka Chamber of Commerce was established on September 16th, 2010 at the Sri Lanka High Commission in London at an event attended by Deputy Minister of Finance and Planning, Dr. Sarath Amunugama, in the presence of prominent UK businessmen, Industrialists and Financiers.

At the occasion, the President of the British Chambers of Commerce (BCC), Neville Reyner signed a Memorandum of Understanding with the Secretary General/CEO of the Ceylon Chamber of Commerce (CCC), Harin Malwatte, establishing the British – Sri Lanka Chamber of Commerce.

The British Chambers of Commerce, established in 1768 and the Ceylon Chamber of Commerce, established in 1839, together boast an impressive and wide-ranging membership with extensive outreach.

Presentations made by the Secretary – General/CEO CCC and the Chairman of De La Rue in the UK considerably boosted the business confidence of the participants at the launch of the British – Sri Lanka Chamber of Commerce.

Secretary General/CEO of the Ceylon Chamber of Commerce, Harin Malwatte in his presentation of the Ceylon Chamber of Commerce and the investment opportunities in Sri Lanka mentioned the attractive investment climate prevailing in Sri Lanka at present:

political stability, ending of a 3 decade long war, infrastructure development and improvements in the ease of doing business with a host of other conditions.

The Preferential Tariff Agreements enjoyed by SL (PTAs) such as the Indo Lanka Free Trade Agreement, Pakistan Sri Lanka Free Trade Agreement, SAARC Free Trade Agreement and the Asia Pacific Trade Agreement were highlighted as being conducive to investments. Bilateral investment protection agreements supported by a constitutional guarantee provide strong protection to foreign investment. Sri Lanka has never defaulted nor has requested rescheduling of any of its international obligations.

Malwatte went on to note that since the ending of the war, the Ceylon Chamber of Commerce has hosted 12 large investor missions in 2009 and 13 up to now in 2010.

In addition 9 delegations from India alone have been hosted by the Chamber. This he mentioned was an indication of the investment interest in Sri Lanka. The UK is not on the top 10 investment countries in 2009 and he expressed the hope that by the end 2011, the UK will figure out as one top 10 investors in Sri Lanka.

London Underwriters Remove Sri Lanka from War Risk Isurance List

11th June 2010, www.lankabusinessonline.com

London underwriters have removed Sri Lanka from the area listed for war risk insurance following lobbying by the island's government that risks have been eliminated with the end of the ethnic war.

A statement from the Joint War Committee in London said it recently reviewed the Listed Areas for Hull War, Strikes, Terrorism and Related Perils, last altered on March 11, 2010, and deleted Sri Lanka.

"The application of this list on individual contracts will be a matter for specific negotiation," it said.

The rating is only a guideline published by the Joint War Committee of London underwriters.

The risk rating was reduced last year after the 30-year ethnic war ended in May with the defeat of Tamil separatists.

Since then the government has been lobbying insurers to remove the country as a listed area.

Lines which call Colombo regularly were not charged additional war risk insurance premiums in recent times.

But the government and shipping businesses were worried that the post-war economic revival could be affected if the island remained as a listed area for war risk.

SL to Request Lloyds to Reduce Additional War Risk Premium Currently Charged by Global Insurance Industry

29th November 2009, www.dailymirror.lk

A delegation consisting of five members will be flying to London on Wednesday (December 2) to once again meet Lloyds of London to request a reduction of the additional war risk premium currently charged by the global insurance industry.

Sri Lanka still remains on the list of war risk countries classified by Lloyds of London and is liable for additional insurance premium as a result and Sri Lanka has been struggling unsuccessfully to be de-listed from the held cover status since it was imposed immediately after the attack on the Katunayake Airport on 24 July 2001.

Currently Sri Lanka's risk level is categorised by Exclusive Analysis in their web site (JCC Cargo Watchlist) as HIGH (2.9). The insurance claim as a consequence to the attack was US$ 576million which is the highest in the history of aviation insurance, equivalent to 16 years of total premium collected by the aviation insurance industry.

It is ironical that a member of the original delegation led by Ronnie De Mel, the then Minister of Shipping, which went to meet the Lloyds of London in 2001 is also a member of the delegation going again next month.

In between, many delegations of officials have gone for meetings with Lloyds of London and there was also regular contact with the High Commissioners Office in London, but all with little success. The held cover status continued during the ceasefire agreement and still continues more than six months after the leadership of the LTTE has been eliminated.

In 2001 as requested by Lloyds of London, the Government appointed a security company called Trident to carry out an external audit and after that the company was reportedly closed under a cloud before it could achieve the given task of removing Sri Lanka from the war risk list.

Subsequently a joint venture between Bagnold and Sathsindhu was appointed in 2004 and their work was inadvertently stalled by the Government, apparently without giving reasons.

According to the Chairman of the Insurance Board of Sri Lanka Udayasiri Kariyawasam, the war risk premium amounts to a huge extra payment of Rs. 20 billion per year. If this estimate is accurate then the true cost so far is a staggering Rs. 180 billion. Continuous delays in resolving this issue will result in costs further mounting, adding on to massive losses.

Analysts wonder when continued visits by officials for nine years failed, whether continuing such visits will deliver results now.

The Joint Apparel Association Forum (JAAF) report submitted to the committee which was appointed by the Secretary of Defense Ministry to resolve this matter states: "The Government of Sri Lanka should obtain the services of an independent security assessment company with international recognition to prepare a report on behalf of the GOSL. This is important to balance out and neutralise any submissions that would be made by the exclusive analysts of Lloyds. This would mitigate any biased submissions."

While the committee has not paid much attention to this proposal, analysts point out that the Joint War Committee of Lloyds of London go by the reports submitted to them by their Security Consultants such as Exclusive Analysis Ltd and Aegis Defense Services Ltd and it is critical to professionally counter such reports by qualified and a recognised security company, as recommended by JAAF.