By Anushika Kamburugamuwa
Dec 02, 2014 (LBO) – A proposal to demutualize the Colombo Stock Exchange (CSE) is ready and would be submitted to the government with the recommendation of Securities and Exchange Commission, a senior Sri Lankan regulator said today.
“Demutualization proposal is ready with the CSE and the SEC has to look at its proposal and make our recommendation to the Minister of Finance,” Nalaka Godahewa, the Chairman of Securities and Exchange Commission told LBO.
“If everything is okay Demutualization proposal will also come into play next year.”
Godahewa said the demutualization bill was ready but it had to be passed by the Parliament.
A demutualization of a stock exchange involves the conversion of an exchange from a Not-for-profit member owned organization to a For-profit shareholder owned Corporation.
The London Stock Exchange, Toronto Stock Exchange, Australian Stock Exchange and New York Stock Exchange are other stock exchanges that have already been demutualized.
“Demutualization is extremely important,"Godahewa said.
“It means taking the ownership of the Colombo Stock Exchange out of the broker community and make it a profit oriented orgernization owned by public,"
“So basically we are broad basing the ownership of the Colombo Stock Exchange,"
“People can invest in this and make money and we expect this to be more independent. That’s the global trend.”
Godahewa said independence is important to grow a business.
“When you take the direct stakeholders out of ownership it becomes more independent,"Godahewa said.
"The independence is required for the growth of the business,"
"We are little late. Other countries have already done that.”
Currently, 292 companies are listed on the CSE with a market capitalization of just over 3090.93 billion rupees up to December. There are 18 member firms that have stock brokering licenses.
“Demutualization proposal is ready with the CSE and the SEC has to look at its proposal and make our recommendation to the Minister of Finance,” Nalaka Godahewa, the Chairman of Securities and Exchange Commission told LBO.
“If everything is okay Demutualization proposal will also come into play next year.”
Godahewa said the demutualization bill was ready but it had to be passed by the Parliament.
A demutualization of a stock exchange involves the conversion of an exchange from a Not-for-profit member owned organization to a For-profit shareholder owned Corporation.
The London Stock Exchange, Toronto Stock Exchange, Australian Stock Exchange and New York Stock Exchange are other stock exchanges that have already been demutualized.
“Demutualization is extremely important,"Godahewa said.
“It means taking the ownership of the Colombo Stock Exchange out of the broker community and make it a profit oriented orgernization owned by public,"
“So basically we are broad basing the ownership of the Colombo Stock Exchange,"
“People can invest in this and make money and we expect this to be more independent. That’s the global trend.”
Godahewa said independence is important to grow a business.
“When you take the direct stakeholders out of ownership it becomes more independent,"Godahewa said.
"The independence is required for the growth of the business,"
"We are little late. Other countries have already done that.”
Currently, 292 companies are listed on the CSE with a market capitalization of just over 3090.93 billion rupees up to December. There are 18 member firms that have stock brokering licenses.
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