The Colombo Stock Exchange (CSE) is being progressive, and is cleaning up the anomalies that have been dogging the share market for years.
Firstly they included non-voting shares which are listed and traded on the exchange in its Index Market Capitalisation (IMC) calculation. In jurisdictions where they allow non-voting shares to be traded, those same shares are included when calculating the capitalisation, but at CSE, despite allowing them to trade, they weren’t calculated in the index. “This was an anomaly that was corrected,” a CSE official told the Business Times.
Including non-voting shares in the calculation of indices is seen as a common practice internationally and is carried out by a number of leading exchanges and index providers globally, he said adding that these shares are non-voting shares eligible for inclusion in the calculation of domestic market capitalisation according to the statistical definition of the World Federation of Exchanges.
While the impact is small in including this in terms of increasing the capitalisation, it still makes a difference in being the right thing to do, the official added. So in June, the All Share Price Index included the non-voting shares currently listed on the CSE. “The non-voting shares listed by the respective constituents of the S&P SL 20 Index are set to be included in the S&P SL 20 Index, provided that they meet relevant liquidity requirements,” the CSE said in a release.
In another move, the CSE introduced a step-up fee structure with a revised threshold of Rs. 100 million in relation to secondary market transaction fee computations, as at end June.
A fee of 1.12 per cent was set to be applicable to share transactions below Rs. 100 million while a fee of 0.6125 per cent is set to be applicable for transactions above Rs. 100 million transactions above Rs. 100 million would therefore be applicable to the step-up fee structure. “This was introduced as initially the structure that was in place wasn’t thought through,” the official said, noting that the tax structure in general is step-up. “This too was introduced to be in line with the standards,” he said.
Firstly they included non-voting shares which are listed and traded on the exchange in its Index Market Capitalisation (IMC) calculation. In jurisdictions where they allow non-voting shares to be traded, those same shares are included when calculating the capitalisation, but at CSE, despite allowing them to trade, they weren’t calculated in the index. “This was an anomaly that was corrected,” a CSE official told the Business Times.
Including non-voting shares in the calculation of indices is seen as a common practice internationally and is carried out by a number of leading exchanges and index providers globally, he said adding that these shares are non-voting shares eligible for inclusion in the calculation of domestic market capitalisation according to the statistical definition of the World Federation of Exchanges.
While the impact is small in including this in terms of increasing the capitalisation, it still makes a difference in being the right thing to do, the official added. So in June, the All Share Price Index included the non-voting shares currently listed on the CSE. “The non-voting shares listed by the respective constituents of the S&P SL 20 Index are set to be included in the S&P SL 20 Index, provided that they meet relevant liquidity requirements,” the CSE said in a release.
In another move, the CSE introduced a step-up fee structure with a revised threshold of Rs. 100 million in relation to secondary market transaction fee computations, as at end June.
A fee of 1.12 per cent was set to be applicable to share transactions below Rs. 100 million while a fee of 0.6125 per cent is set to be applicable for transactions above Rs. 100 million transactions above Rs. 100 million would therefore be applicable to the step-up fee structure. “This was introduced as initially the structure that was in place wasn’t thought through,” the official said, noting that the tax structure in general is step-up. “This too was introduced to be in line with the standards,” he said.
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