Getting Started
What is a Stock Exchange?
A Stock Exchange provides a liquid, open market for buying and selling of shares, debentures
etc. of publicly owned companies. Companies, which use the mechanism of the stock market
to raise debt or equity capital, commonly enter the stock market through issuing shares or
debentures to the public. Sri Lanka's only stock exchange, the Colombo Stock Exchange
(CSE) currently has 237 listed companies, 15 member firms, 5 trading members and one
specialized debt trading member.
What is a listed company?
When a company raises funds to support its growth by selling ownership interests (shares in
itself) to the investing public, those shares need to be "listed" and traded on that country's
stock exchange/s. These companies need to be in compliance with an Exchange's set of
listing rules such as previous profit records, issued/paid up capital etc. in order to be
admitted to the official list.
What is the Colombo Stock Exchange (CSE)?
The Colombo Stock Exchange (CSE) is the organization responsible for the operation of the
stock market in Sri Lanka. The CSE is a company limited by guarantee established under the
Companies Act No. 17 of 1982 and licensed by the Securities and Exchange Commission of
Sri Lanka (SEC) to operate as a stock exchange in Sri Lanka.
How do you purchase shares
There are two ways to purchase shares
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From a new issue of shares (Primary Market),
The primary market is the market for new shares or debenture issues. In the primary
market, the security is purchased directly from the issuer (company). In a primary
issue, the company offering the share/debenture issue publishes a document known
as the prospectus. It is an invitation to the generalpublic to buy shares or debentures
of that company.
On the Secondary Market through a stock broker.
A market in which an investor could either buy or sell shares, debentures and
Government Securities from or to another investor, subsequent to the original
issuance in the primary market.
Types of securities traded at the CSE
Shares
Corporate Debentures
Government Securities
What is Central Depository Systems (Pvt) Ltd?
Central Depositors Systems (Pvt) Ltd is wholly owned Subsidiary of the CSE, which has taken
over the functions of Clearing, Settlement and Registration from the Stock Exchange.
How do I open a CDS account?
To open a Securities Account in the CDS you should complete an Account Opening Form,
which can be obtained from your stockbroker or custodian bank. There are no fees charged
for opening a CDS account. Your participant organisation may call for documents establishing
your identity. It is possible to open and operate an account on the same day.
Every account will be identified through a unique account number and all correspondence and
dealings, including trading and depository activities, will refer to this account number.
Your CDS accounts should be operated through your Participant organisation, and any
changes to your account will have to be forwarded through the Participant. You cannot issue
instructions directly to the CDS.
What is the purpose of my CDS account?
Your CDS account enables you to participate in paperless trading on the Colombo Stock
Exchange. Your account will be maintained in double-entry book-keeping format and will be
updated on real time as your participant lodges your transactions at CDS.
What is the reason for holding my securities in scrip-less form?
The trading system at the Colombo Stock Exchange is fully automated and thereby the paper
securities you lodge in your CDS account are translated into an electronic portfolio. When you
buy securities, your account is automatically credited with the shares purchased and the
corresponding seller's account is automatically debited with the same amount. Thus the
entire process is automated and involves no exchange of bills or certificates.
Who is a Participant?
A participant is a central depository agent, either a stockbroker or a custodian bank, who has
been authorized by CDS to open accounts in CDS on behalf of investors.
Who are stockbrokers?
Stockbrokers are registered members of an Exchange, authorized to buy and sell shares.
These stockbrokers provide their services to the investing public interested in trading in
shares of listed companies.
The CSE has 15 member firms and 5 trading member firms authorized to buy and sell shares
What do I deposit in a CDS account?
Shares and bonds
Must I open a CDS account?
Yes, if you intend to trade in shares, which have been selected for depositing, through the
Colombo Stock Exchange.
Can I use a different broker from the one I have been using?
You may maintain multiple accounts through several Participant organisations. You can also
transfer securities across accounts held with different Participants.
Will it cost me more to use CDS?
No. There is absolutely no increase in cost for the CDS accountholder.
What is the process of depositing securities?
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Visit a participant with the certificates you want to immobilize.
Be sure you have already opened an account or are ready to do so.
You will be issued with and assisted to complete a Security Deposit Form.
Sign your form with the signature used when buying the shares.
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Return the form to the participant together with the certificates you have included on
the form to be deposited.
You will be given a receipt as evidence of your deposit.
The participant will forward the form and the certificate to CDS
CDS will forward the certificates and forms to the company’s shares registrar for
verification.
When the registrar confirms the certificates as genuine, the shares will be deposited
in your account.
Once the shares are in your account you can trade in them.
How do you withdraw shares from CDS
You can withdraw shares from your account, using a withdrawal form that can be obtained
from your broker, the CDS will facilitate the removal of shares from your account so that you
may receive a scrip from the relevant company.
How does Intra- Account transfers occur?
You may also transfer part or all, of your portfolio between accounts opened through different
participant firms. Once the Intra-Account transfer is completed and forwarded through the
respective participant, the CDS will acknowledge by returning a duplicate of said form. Once
checked for accuracy and completeness, the transfer will take effect.
The Exchange has permitted free transfers through different accounts in the CDS in order to
accommodate foreign clients operating in different time zones to that of Sri Lanka on
completion of the relevant form. However these transfers can only be effected before the
expiry of two market days from the date of conclusion of the first transaction ( T +2); and
only on condition that there would be no change in the fund settlement source indicated at
the time of the first transaction as a result of the subsequent transfer
How does Inter-Account transfers occur?
Private Transfer of securities may also take place between account holders providing a valid
relationship exists, prior approval of the Securities and Exchange Commission of Sri Lanka
must be sought in order for such transfers to take place. However, in the instance of death of
an account holder, securities may be transferred to next of kin, using the relevant CDS form
without SEC approval.
What do I get to prove I have deposited securities?
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You get the receipt of the deposit form
You get a monthly statement if you have a deposit or a trade that month.
You get a quarterly statement if you have not had a trade for three months.
The statements are issued directly to your address as indicated on the account
opening form.
How Safe Is CDS?
CDS has taken measures to ensure the security of your shares. The company has back up
facilities and procedures that would ensure business continuity in the event of anything
happening either to the computer system or its usual premises. CDS has taken precautions to
ensure its system is not interfered with. CDS has employed staff of high integrity and keep
very high levels of confidentiality.
Foreign Investment in Shares
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 up to 100% of the issued capital of such company to approved country funds,
approved regional funds, subject to the exclusions and limitations as follows.
Exclusions: General permission shall not apply in respect of shares of a company proposing
to carry on or carrying on any of the following businesses:
(i) Money lending
(ii) Pawn broking
(iii) Retail trade with a capital of less than One Million US Dollars.
(iv) Coastal fishing
Limitations:
(a) General permission shall apply in respect of shares in a company carrying on or proposing
to carry on any of the following businesses only up to 40% of the issued capital of such
company, or if approval has been granted by the Board of Investment of Sri Lanka for a
higher percentage of foreign investment in any company, only up to such higher percentage.
(i) Production of goods where Sri Lanka's exports are subject to internationally determined
quota restrictions;
(ii) Growing and primary processing of tea, rubber, coconut, cocoa, rice, sugar and spices;
(iii) Mining and primary processing of non renewable national resources;
(iv) Timber based industries using local timber;
(v) Fishing (deep sea fishing);
(vi) Mass communications;
(vii) Education;
(viii) Freight forwarding;
(ix) Travel agencies;
(x) Shipping agencies.
(b) The permission shall apply in respect of the shares of a company carrying on or proposing
to carry on any of the businesses set out below only upto the percentage of the issued capital
of the company for which percentage either general or special approval has been granted by
the Government of Sri Lanka or any legal or administrative authority set up for the approval
of foreign investment in such businesses.
(i) Air transportation;
(ii) Coastal shipping;
(iii) Industrial undertaking in the second schedule of the Industrial Promotion Act. No. 46 of
1990, namely
a. Any industry manufacturing arms, ammunitions, explosives, military vehicles and
equipment aircraft and other military hardware;
b. Any industry manufacturing poisons, narcotics, alcohols, dangerous drugs and toxic,
hazardous or carcinogenic materials;
c. Any industry producing currency, coins or security documents;
(iv) Large scale mechanized mining of gems;
(v) Lotteries.
The above terms and conditions shall not be construed as affecting or having a bearing on
enterprises as defined in the Board of Investment of Sri Lanka Law, No.4 of 1978 in respect
of which exemptions have been granted from the Exchange Control Act to the extent of such
exemption, or the provisions of any other written law.
Foreign investment in Debt Securities is not permitted.
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. Exchange control
regulations on repatriation of proceeds rising out of investments i.e. dividends paid on shares
and sale proceeds of shares, made through SIERA have been liberalized after 03rd December
1990.
Special provisions have also been made at CDS to accommodate foreign clients operating
from time zones different to that of Sri Lanka. The CSE has permitted free transfers between
accounts in the system for transactions concluded by such clients. These transfers should be
concluded before the expiry of two market days from the date of conclusion of the first
transaction (T+2). It is also necessary to ensure that there be no change in the funds
settlement source (same participant) indicated at the time of the first transaction as a result
of the subsequent transfer.
PROCEDURE FOR INVESTMENT BY SRI LANKAN NON RESIDENTS
A special scheme exists for non-resident Sri Lankans to remit money for investment purposes
in Sri Lankan companies through Rupee Accounts for Non-Resident Sri Lankan Investment
(RANSI) Maintained with authorized dealers.Sri Lankan citizens who have left the country to
take up employment, business or a profession and continue to reside abroad, and those
citizens of Sri Lanka who have made their permanent place of abode outside Sri Lanka are
eligible to operate a RANSI with Authorized Dealers to remit their foreign exchange earnings
for investment purposes. Income from such investments and interest earned on funds lying
to the credit of the account would also be free to be taken back without exchange control
restrictions.
Funds channeled through the account can also be invested in other assets such as
government securities, debentures and units in unit trusts, without exchange control
approval. Investments in real assets, including land and buildings, are also permitted.
Payment for investments made under this scheme, must be made via bank drafts purchased
out of funds in a RANSI account. All income from investments – i.e., interest, dividends,
profits and rental income can be credited to the RANSI account by an investor. Funds realized
on the sale and liquidation of investments can also be credited to the RANSI account. There
are no exchange control restrictions on remittance abroad of funds that may be available in a
RANSI account.
REGIONAL FUNDS AND COUNTRY FUNDS
Regional and Country Funds should obtain approval from the Securities & Exchange
Commission of Sri Lanka prior to making investments.
Regulations regarding Regional Funds
A Regional Fund is defined as one floated abroad for the purpose of investment in a particular
region by persons/institutions who are non-resident. Regional Funds seeking to invest in Sri
Lanka should fulfill the following criteria.
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Arrangements to transfer fund management technology to Sri Lanka.
Experience in investments in the securities markets of the world in particular the
emerging markets in Asia.
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Suitability of the fund structure, i.e., fund management, investment advice,
custodianship, investment guidelines.
Professionalism and experience of the Fund Management.
Regulations regarding Country Funds
A Country Fund is defined as one floated abroad for the purpose of making investments in a
specific country for persons/institutions who are non-resident. Country Funds seeking to
invest in Sri Lanka should fulfill the following criteria.
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Development character of the fund i.e. in addition to investment in the secondary
market, plans for investments in initial public offerings and unlisted shares.
Arrangements to transfer fund management technology to Sri Lanka and willingness
to participate in the equity of a fund management company in Sri Lanka.
Experience with structuring Country Funds, particularly in the Asian regions.
Suitability of the fund structure, i.e., fund management, investment advice,
custodianship, investment guidelines and arrangements for listing.
The ability to raise the capital amount economically and with appropriate investor mix
on underwriting and /or private placement basis.
Initial investment of US$ 25 to 30 Mn. by the fund
FOREIGN INVESTMENT IN GOVERNMENT TREASURY BONDS
Foreign Investment in Rupee Denominated Government Treasury Bonds
The government has decided to open the Rupee denominated Treasury bond market for
foreign investors with effect from November 01, 2006. Treasury bond is a medium and longterm debt instrument issued by the government of Sri Lanka in order to raise funds from the
domestic market to finance the government budgetary operations. This is the first instance
such a liberalization of policy has been taken by the government to open the gilt-edged rupee
securities market for foreign investors. This measure will increase the freedom in capital
account transactions and thereby enhance the development of the capital market by
broadening the investor base and increasing the competition in the bond market.
Foreign investors including foreign country funds, mutual funds and regional funds approved
by the Securities and Exchange Commission (SEC) of Sri Lanka, corporate bodies
incorporated outside Sri Lanka and citizens of foreign states are permitted to invest in
Treasury bonds. Total investment by foreign investors in Treasury bonds is limited to 5% of
the value of Treasury bonds outstanding at any given point of time. Foreign investors can
purchase Treasury bonds at any time from the secondary market through participating
agents, i.e., Licensed Commercial Banks (LCBs) and Primary Dealers (PDs). In addition,
foreign investors are also permitted to bid at primary auctions of Treasury bonds through
Primary Dealers. Foreign investor who purchased such Treasury bonds is in a position to sell
or transfer them to any person, whether a resident in Sri Lanka or a resident outside Sri
Lanka in the secondary market without any holding period.
Foreign investors have to advice their own banks to open a special rupee account, i.e.,
Treasury Bond Investment External Rupee Account (TIERA) in an LCB in Sri Lanka. Foreign
exchange brought in to the country for the purchase of Treasury bonds and all proceeds
received by sale or transfer or maturity of Treasury bonds and interest income of Treasury
bonds are routed through this TIERA account. Participating agents (LCBs and PDs) will open a
security account for foreign investors in the Central Depository System (CDS) maintained by
the Public Debt Department (PDD) of the Central Bank of Sri Lanka. This account is
debited/credited simultaneously based on foreign investors trading in the market.
Foreign Investment in US Dollar Denominated Sri Lanka Development Bonds:
Foreign investors including Citizens of foreign states whether resident in Sri Lanka or outside
Sri Lanka, Citizens of Sri Lanka who have made their permanent abode outside Sri Lanka,
Citizens of Sri Lanka who have proceeded to outside Sri Lanka to take up employment or to
set up business or in a profession and Bodies corporate or un-incorporate established under
the laws of a country other than Sri Lanka, are permitted for purchasing, transferring and
making payments in respect of transactions of Sri Lanka Development Bonds issued by the
Government of Sri Lanka. The minimum investment is USD 100,000 and further investments
should be in the multiples of USD 10,000. Investors are entitled for semi annual interest
payment at a rate of six month LIBOR plus margin through competitive bidding. Both
principal and interest payment will be in US Dollars.
Transaction Costs
Transaction Costs
Transaction cost applicable for equity & debt securities given below:
Equity
Transactions up to Rs. 1 Million - 1.425%
Divided as follows:
Net amount to the broker
S.E.C.
C.S.E.
C.D.S.
Govt. Cess tax
-
1.000
0.090
0.105
0.030
0.200
-
0.800
0.090
0.105
0.030
0.200
Transactions over Rs. 1 Million - 1.225%
Divided as follows:
Net amount to the broker
S.E.C.
C.S.E.
C.D.S.
Govt. Cess tax
Transactions over Rs. 100 Million - 0.42% and Nett amount to broker is negotiable
Divided as follows:
Net amount to the broker
S.E.C.
C.S.E.
C.D.S.
Govt. Cess tax
-
Negotiable
0.090
0.105
0.030
0.200
(Subject to a minimum brokerage of Rs. 10/- per contract & a minimum CDS fee of Rs. 5/-)
Intra day Trading
With effect from 15th February 2006, the transaction fee due to the broker, CSE, CDS and
SEC on intra day trades, where a client buys and sells or sells and buys the same security on
the same day through the same broker will not be charged on one side of the transaction.
Corporate Debt
All Transactions - 2 basis points
(Divided equally among S.E.C, C.S.E & C.D.S)
Broker to Client - Negotiable
(Subject to a minimum CDS fee of Rs. 5/-)
Government Debt
All Transactions – Negotiable.
List of Stockbrokers
Members of the CSE
Asha Phillip Securities Ltd
Level 4, ‘Millennium House’, 46/58, Navam Mw., Colombo 2.
Phone: 2429100
Fax: 2429199
Email: apsl@ashaphillip.net
Asia Securities (Pvt) Ltd
Level 21, West Tower, World Trade Centre, Colombo 1.
Phone: 2423905, 5320000
Fax: 2336018
Email: enquiry@asiacapital.lk
Bartleet Mallory Stockbrokers (Pvt) Ltd
‘Bartleet House’, 65, Braybrooke Place, Colombo 2.
Phone: 5220200
Fax: 2434985
Email: info@bartleetstock.com
Ceylinco Stockbrokers (Pvt) Ltd
Level 9, Ceylinco House, 69, Janadhipathi Mw., Colombo 1.
Phone: 4714300, 4714388-9, 0777891871, 0777896064
Fax: 2387228
Email: csblcmb@slt.lk
CT Smith Stockbrokers (Pvt) Ltd
4-14, Majestic City, 10, Station Road, Colombo 4.
Phone: 2552290-4
Fax: 2552289
Email: ctssales@sltnet.lk
DFCC Stockbrokers (Pvt) Ltd
1st Floor, 73, W.A.D. Ramanayake Mw., Colombo 2.
Phone: 2446021-2, 2446031-4
Fax: 2437149
Email: sales@dfccstockbroker.com
DP Global Securities (Pvt) Ltd
3rd Floor, Forbes & Walkers Building, 46/58, Nawam Mawatha Colombo 02.
Phone: 4700111, 2307366
Fax: 4700112, 2307365
Email: dpgs1@sltnet.lk
HNB Stockbrokers (Pvt) Ltd
Level 7, HNB Towers, 479, T.B. Jayah Mw., Colombo 10.
Phone: 2663663
Fax: 2663698, 2663699
Email: hnb@hnbstock.com
J B Securities (Pvt) Ltd
150, St. Joseph Street, Colombo 14.
Phone: 2490900, 0772490900, 0772490901
Fax: 2430070, 2446085
Email: jbs@jb.lk
John Keells Stockbrokers (Pvt) Ltd
130, Glennie Street, Colombo 2.
Phone: 2326003, 2338066-7, 2342066-7, 2446694-5, 2439047-8,
4710721-4
Fax: 2342068, 2326863
Email: jkstock@keells.com
Lanka Securities (Pvt) Ltd
5th Floor, 86, Galle Road, Colombo 3.
Phone: 4706757
Fax: 4706767
Email: lankasec@sltnet.lk
Lanka Orix Securities (Pvt) Ltd
42, Sir Mohamed Macan Markar Mw., Colombo 3.
Phone: 5335225
Fax: 5365725
Email: register@lankaorixsecurities.com
NDBS Stockbrokers (Pvt) Ltd
5th Floor, NDB Building, 40, Navam Mw., Colombo 2.
Phone: 2314170-8
Fax: 2314180
Email: mail@ndbs.lk
S C Securities (Pvt) Ltd
2nd Floor, 55, D R Wijewardene Mw., Colombo 10.
Phone: 4711000
Fax: 2394405
Email: cscres@sltnet.lk
Somerville Stockbrokers (Pvt) Ltd
137, Vauxhall Street, Colombo 2.
Phone: 2329201-5, 2332827, 2338292-3
Fax: 2338291
Email: ssb@sri.lanka.net
Trading Members (Debt and Equity)
Amana Securities Ltd.
532/4 F, Srikotha Lane, Galle Road,
Colombo 3.
Phone: 2506101-4,
Fax: 2506105
Capital Alliance Securities (PVT) LTD
Level 5, Millennium House, 46/58, Nawam Mw., Colombo 02.
Phone: 2317777
Fax. 2317788
First Capital Equities (Pvt) Ltd.
32nd Floor, East Tower,
World Trade Centre, Echelon Square, Colombo 1.
TPhone: 5884400 Fax: 5884401
SMB Securities (Pvt) Ltd
Landmark Building, 385, Galle Road, Colombo 03.
Phone: 5539593
Fax: 2301798
E-mail: smbsecurities@gmail.com
Taprobane Securities (Pvt) Ltd
10, Gothami Road, Colombo 08.
Phone: 5328100 Fax: 5328109
E-mail: janaka@tap.eureka.lk, dayan@tap.eureka.lk
COLOMBO STOCK EXCHANGE
Level 4, West Block,
World Trade Centre, Echelon Square,
Colombo 1, Sri Lanka.
Phone: 94-11-2446581(Hunting)
Fax: 94-11-2445279
E-mail: info@cse.lk
Web: www.cse.lk