H D H Senewiratne
Sri Lanka is in the process of introducing demutualization to the Colombo Stock Exchange (CSE), Securities and Exchange Commission (SEC) sources said.
The SEC is in the process of finalizing the demutualization of the CSE to bring the Capital Market in line with those of more mature level, Former Executive Committee member of the SEC, Sujeewa Rajapakse told Daily News Business .
He said that since he was the President of the Sri Lanka Institute of Chartered Accountants in 2013, which holds the ex officio Commission member position of the SEC, was actively involved in introducing and promoting this concept to the country.
"During that period I handled the demutualization process, which is now about to be introduced to the country very soon. But now it is looking at quantifying the legal impediment and few other technicalities on this new concept," Rajapaksa said.
The Cabinet had approved a draft bill to be presented to parliament.
The SEC is an entity limited by guarantee, nominally owned by a group of legacy broking houses called full members.
Further they are now looking at the government, stock brokers and two other members to be main stakeholders.
In the case of demutualization they will get shares in the exchange.
The stock exchange also has trading members who were licensed later, he said.
The SEC had also drafted changes to the governing law of the agency to set up a clearing house.
Securities and Exchange Board of India has given suggestions which were given to technical consultants for review.
The demutualizing of the CSE would lead to it becoming competitive, bringing in technological innovations to the capital market and for the internationalization of membership and increase investor participation.
One of the main reasons of this initiative is to raise additional capital to expand and innovate.
The increased competition in the capital markets necessitates stock exchanges to invest in technological infrastructure that will speed up the processing of orders and reducing transaction costs for investors.
A mutually owned stock exchange is barely able to raise capital from anyone other than its members. Further a demutualized exchange operates in a more customer-focused manner and is able to take action more straightforwardly and speedily to changes the business environment and meet competitive challenges.
The SEC is in the process of finalizing the demutualization of the CSE to bring the Capital Market in line with those of more mature level, Former Executive Committee member of the SEC, Sujeewa Rajapakse told Daily News Business .
He said that since he was the President of the Sri Lanka Institute of Chartered Accountants in 2013, which holds the ex officio Commission member position of the SEC, was actively involved in introducing and promoting this concept to the country.
"During that period I handled the demutualization process, which is now about to be introduced to the country very soon. But now it is looking at quantifying the legal impediment and few other technicalities on this new concept," Rajapaksa said.
The Cabinet had approved a draft bill to be presented to parliament.
The SEC is an entity limited by guarantee, nominally owned by a group of legacy broking houses called full members.
Further they are now looking at the government, stock brokers and two other members to be main stakeholders.
In the case of demutualization they will get shares in the exchange.
The stock exchange also has trading members who were licensed later, he said.
The SEC had also drafted changes to the governing law of the agency to set up a clearing house.
Securities and Exchange Board of India has given suggestions which were given to technical consultants for review.
The demutualizing of the CSE would lead to it becoming competitive, bringing in technological innovations to the capital market and for the internationalization of membership and increase investor participation.
One of the main reasons of this initiative is to raise additional capital to expand and innovate.
The increased competition in the capital markets necessitates stock exchanges to invest in technological infrastructure that will speed up the processing of orders and reducing transaction costs for investors.
A mutually owned stock exchange is barely able to raise capital from anyone other than its members. Further a demutualized exchange operates in a more customer-focused manner and is able to take action more straightforwardly and speedily to changes the business environment and meet competitive challenges.
Source:http://www.dailynews.lk
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