The Colombo Stock Exchange (CSE) is the primary stock exchange in Sri Lanka. It is a fully automated exchange that facilitates the trading of stocks, bonds, and other securities. Established in 1985, the CSE plays a vital role in the country's capital market, providing a platform for companies to raise capital through the issuance of stocks and enabling investors to buy and sell securities. The CSE operates under the regulation and supervision of the Securities and Exchange Commission of Sri Lanka (SEC), ensuring fair and transparent trading practices.
Transaction cost applicable for equity & debt securities given below:
Equity - with effect from 27th June 2017
Transactions up to Rs. 100 Million - 1.12%
DIVIDED AS FOLLOWS:
|Share Transaction Levy||0.300%|
TRANSACTIONS OVER RS. 100 MILLION
|Share Transaction Levy||0.300%|
TRANSACTION COST WILL BE APPLIED ON A STEP UP BASIS FOR TRANSACTIONS OVER RS. 100 MILLION.
Eg : Consider a transaction of Rs.102Mn. The transaction cost of 1.12% will be applicable for the first Rs. 100 Million and 0.6125%* will be applicable for the balance amount, as in the example below:
|Transaction Value||Consolidated Fees|
|Rs. 100 Million||1.1200 %||Rs. 1,120,000|
|Rs. 2 Million||0.6125* %||Rs. 12,250|
|Rs. 102 Million||-||Rs. 1,132,250|
*0.6125% includes the negotiated brokerage assumed as 0.2% for the purpose of this calculation.
There are no specific taxes applicable to transactions on the Colombo Stock Exchange (CSE).
To purchase shares on the Colombo Stock Exchange (CSE), you generally need to follow these steps:
Find a stockbroker: Select a reputable stockbroker who is a member of the CSE. They will act as your intermediary to execute your trades on the exchange. You can search for licensed stockbrokers on the CSE website or get recommendations from trusted sources.
Open a trading account: Contact the chosen stockbroker and open a trading account. You will typically need to provide identification documents, proof of address, and complete the required account opening forms.
Fund your account: Deposit funds into your trading account to have the necessary capital for purchasing shares. The stockbroker will provide you with instructions on how to transfer funds.
Research and select stocks: Conduct thorough research on the companies listed on the CSE and analyze their financial performance, industry trends, and any other relevant information. Based on your analysis, choose the stocks you wish to purchase.
Place an order: Contact your stockbroker or use their online trading platform to place an order. Specify the stock name, quantity, and any other required details. You can place market orders (buying at the prevailing market price) or limit orders (specifying a specific price at which you are willing to buy).
Monitor your investments: Keep track of your investments and monitor the performance of the stocks you have purchased. It is essential to stay updated on market news, company announcements, and any other factors that may affect your investment.
It's important to note that the specific procedures and requirements may vary among different stockbrokers. Therefore, it is advisable to consult with your chosen stockbroker for detailed guidance on their specific processes and any additional requirements they may have.
Opening a Central Depository System (CDS) account offers several benefits for investing in the Colombo Stock Exchange (CSE). Here are some key advantages:
Easy and secure holding of securities: A CDS account allows you to hold your securities electronically in a centralized depository system. This eliminates the need for physical share certificates, reducing the risk of loss, theft, or damage to your investment.
Convenient trading and settlement: With a CDS account, you can easily buy and sell shares on the CSE through your stockbroker. The trading and settlement process is streamlined, making it more efficient and convenient compared to the traditional paper-based system.
Quick and seamless transactions: By having a CDS account, you can execute trades more swiftly. The transfer of shares between buyers and sellers is done electronically, leading to faster transaction times and reducing the chances of errors or delays.
Access to IPOs and rights issues: Opening a CDS account allows you to participate in initial public offerings (IPOs) and rights issues offered by companies listed on the CSE. This gives you the opportunity to invest in new offerings and potentially benefit from capital appreciation.
Dividend and interest payments: Companies typically credit dividend and interest payments directly to CDS accounts. This ensures prompt receipt of income from your investments without the need for physical checks or manual processing.
Corporate actions and benefits: Holding shares in a CDS account makes it easier to participate in corporate actions such as bonus issues, stock splits, or mergers. You can conveniently receive additional shares or exercise your rights through the CDS system.
Portfolio tracking and statements: CDS accounts provide regular statements and reports that offer comprehensive information on your portfolio holdings, transactions, and other relevant details. This helps you track the performance of your investments and facilitates accurate record-keeping.
It's important to note that opening a CDS account is typically a prerequisite for trading on the CSE. The specific procedures, requirements, and associated fees for opening and maintaining a CDS account may vary, so it's advisable to consult with a licensed stockbroker or the CSE for detailed information and guidance.
To open a Central Depository System (CDS) account, you can follow these general steps:
Choose a stockbroker: Select a licensed stockbroker who is a member of the Colombo Stock Exchange (CSE). You can find a list of licensed stockbrokers on the CSE website or through other reliable sources.
Contact the stockbroker: Reach out to your chosen stockbroker and express your interest in opening a CDS account. They will provide you with the necessary information and guide you through the account opening process.
Complete the account opening forms: The stockbroker will provide you with account opening forms, which you need to complete accurately and provide the required documents. These documents may include:
Identification documents: Submit copies of your national identity card, passport, or any other officially recognized identification documents. Proof of address: Provide a document (such as a utility bill or bank statement) that verifies your residential address. Other required documents: The stockbroker may require additional documents or forms as per their specific requirements. Submit the application: Once you have completed the account opening forms and gathered the necessary documents, submit them to your stockbroker. You can do this in person or through electronic means, as per the stockbroker's instructions.
Verification and approval: The stockbroker will verify the information and documents provided. Once the verification process is complete, they will submit your application to the CDS for approval.
CDS account activation: After receiving approval from the CDS, your stockbroker will inform you that your CDS account has been activated. They will provide you with your CDS account number, login details (if applicable), and any additional instructions for accessing and managing your account.
Fund your account: To start investing, you will need to deposit funds into your CDS account. The stockbroker will provide you with instructions on how to transfer funds to your account.
It's important to note that the specific requirements and processes may vary among stockbrokers. Therefore, it is advisable to consult with your chosen stockbroker directly for detailed guidance and any additional information or documents they may require for opening a CDS account.
The transaction costs associated with a trade on the Colombo Stock Exchange (CSE) typically include brokerage fees and regulatory charges. Here's a breakdown of the common transaction costs:
Brokerage fees: When you execute a trade through a stockbroker, they charge a brokerage fee for their services. The brokerage fee is usually calculated as a percentage of the transaction value or as a fixed fee per trade. The specific brokerage rates may vary among different stockbrokers, so it's advisable to check with your chosen stockbroker for their fee structure.
Clearing and settlement fees: The CSE and its clearinghouse charge clearing and settlement fees for facilitating the clearing and settlement of trades. These fees are typically calculated based on the trade value or quantity and are usually a small percentage of the transaction value.
Regulatory charges: The Securities and Exchange Commission of Sri Lanka (SEC) imposes certain regulatory charges on trades executed on the CSE. These charges may include a Securities Transaction Levy (STL) and other regulatory fees. The STL is currently set at a percentage of the transaction value.
It's important to note that the specific transaction costs may vary, and it is advisable to consult with your stockbroker or review their fee schedule to understand the exact costs associated with trading on the CSE. Additionally, brokerage fees and other charges may be subject to change, so it's recommended to stay updated with the latest information from your stockbroker or the CSE.
Transactions on the Colombo Stock Exchange (CSE) are generally kept confidential. The CSE, stockbrokers, and other market intermediaries are bound by regulatory and legal requirements to maintain the confidentiality of investor transactions and personal information. However, there are a few important points to consider:
Regulatory obligations: The CSE and its participants are subject to regulations and guidelines that emphasize the importance of maintaining client confidentiality. These regulations aim to protect investor privacy and prevent the misuse or unauthorized disclosure of sensitive information.
Data protection measures: Stockbrokers and other market intermediaries have systems and procedures in place to safeguard investor information. They employ data protection measures, secure online platforms, and adhere to industry best practices to ensure the confidentiality and integrity of client transactions.
Limited disclosure for regulatory purposes: While the general principle is confidentiality, there may be instances where the CSE or stockbrokers are required to disclose certain information to regulatory authorities or as mandated by law. These disclosures typically relate to compliance, reporting, and legal requirements.
Anonymous trading: The CSE provides an anonymous trading facility known as "DVP (Delivery Versus Payment) Anonymous Trading." Under this facility, the identities of the buyers and sellers are concealed during the trade execution process, further enhancing confidentiality.
It is important to note that while efforts are made to maintain confidentiality, the nature of the stock market involves the sharing of transaction details with various market participants, including stockbrokers, regulators, and clearing entities. However, this sharing of information is typically restricted to what is necessary for the proper functioning of the market and in compliance with applicable laws and regulations.
If you have specific concerns about confidentiality, it is advisable to review the privacy policies and terms of service provided by your stockbroker or consult with them directly to understand their practices regarding client confidentiality and data protection.
The settlement process for trades on the Colombo Stock Exchange (CSE) typically follows a T+3 (trade date plus three business days) settlement cycle. Here are the key steps involved in the settlement process:
Trade execution: When a trade is executed on the CSE, the buyer and seller agree on the price, quantity, and other relevant details of the transaction. The trade is recorded by the stockbroker and reported to the CSE.
Trade confirmation: After the trade is executed, both the buyer and seller receive trade confirmations from their respective stockbrokers. The trade confirmation includes details such as the trade price, quantity, trade date, and settlement date.
Securities delivery: On the settlement date, the seller delivers the securities to the buyer. This is facilitated through the Central Depository System (CDS), where the securities are held electronically. The seller's stockbroker initiates the transfer of the securities from the seller's CDS account to the buyer's CDS account.
Funds settlement: Simultaneously with the delivery of securities, the buyer pays the agreed-upon amount to the seller. The funds settlement is typically facilitated through the Automated Payment System (APS) or other designated settlement mechanisms.
Confirmation of settlement: Once the securities are successfully transferred to the buyer's CDS account and the funds settlement is completed, both the buyer and seller receive confirmation of settlement from their stockbrokers. This confirms the completion of the trade settlement process.
It's important to note that the settlement process may involve additional steps or variations based on factors such as the type of trade (e.g., market order, limit order), the type of securities being traded, and any specific arrangements made between the buyer and seller.
The CSE and its participants, including stockbrokers and the CDS, have systems and processes in place to ensure the smooth and efficient settlement of trades while processes in place to ensure the smooth and efficient settlement of trades while
To transfer money to your Central Depository System (CDS) account on the Colombo Stock Exchange (CSE), you can typically follow these steps:
Contact your stockbroker: Get in touch with your stockbroker, who will guide you through the process of transferring funds to your CDS account. They will provide you with specific instructions and details for the transfer.
Bank transfer: The most common method for funding your CDS account is through a bank transfer. Follow your stockbroker's instructions to initiate the transfer from your bank account to the designated account provided by the stockbroker. Ensure that you include the necessary reference or identification details to correctly identify your transaction.
Provide necessary information: When initiating the bank transfer, you may be required to provide specific information, such as your CDS account number, name, and other details as instructed by your stockbroker. This information is crucial to ensure that the funds are correctly credited to your CDS account.
Confirm transfer and reconcile: After initiating the transfer, retain a copy of the transaction receipt or confirmation for your records. It is advisable to cross-check the transfer details with your stockbroker to ensure accuracy and facilitate any necessary reconciliation.
Confirmation from stockbroker: Once the funds transfer is completed, your stockbroker will confirm the receipt of funds in your CDS account. They will provide you with the necessary updates and may issue a confirmation statement.
It's important to note that the specific procedures and requirements for transferring funds to your CDS account may vary depending on your stockbroker and their preferred banking arrangements. Therefore, it is advisable to consult with your stockbroker directly to obtain the accurate and up-to-date instructions for transferring funds to your CDS account on the CSE. They will provide you with the necessary guidance and any additional information specific to their processes.