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Trading on the Colombo Stock Exchange

Opening a securities account

The most frequently used custodian banks in Sri Lanka by foreign clients to open a SIA accounts include HSBC, Standard Chartered Bank, Deutsche and Citi.

The SIA permits the foreign institution or individual to trade in any listed security without any restrictions or limitations on the repatriation of funds. Upon opening an SIA account, the relevant account holder will be issued with a Central Depository System (CDS) account number (example 4321 FC) which needs to be quoted when executing a transaction.

An SIA account would typically take two weeks to be opened by a foreign fund upon submission of all required documents and being vetted by the regulator, the Securities and Exchange Commission. A non-resident individual account typically takes 2 - 3 days to be opened upon submission of all required documents. For details regarding documentation required to open a securities account for foreign funds, company or individual as well as contact details of leading custodian banks in Sri Lanka please click here

For account opening forms and details regarding opening a direct securities account with John Keells Stock Brokers for a local institution or individual, please click here

Foreign ownership on the Colombo Stock Exchange

Foreign investment is encouraged and investment in companies listed on the Colombo Stock Exchange is unrestricted. Foreign ownership is permitted upto 100% in all listed securities except for a 40% cap on Plantations. Equity holdings in banks are restricted to 10% for any single local or foreign account holder or account holders acting in concert. Ownership in banks can be extended to 15% with the approval of the Monetary Board of the Central Bank of Sri Lanka.

Taxation

There is no Capital Gains Tax imposed on quoted securities, while a withholding tax of 10% is charged on dividends.

Disclosure requirements

A local or foreign client must inform the Colombo Stock Exchange upon acquiring 10% of a listed entity with the next level of disclosure coming at the threshold of 20%. Furthermore acquisition of 30% of the voting shares of a company by an individual/entity or a group acting in concert triggers a mandatory offer to purchase all outstanding shares in accordance with the take-overs and Mergers Code 1995 – (amended 2003).

Trading environment

Investors may place their orders with JKSB via Bloomberg mail/IB, office email, phone or fax with execution instructions. Foreign institutional and individual clients may also direct orders via one of our multiple global trade execution partners. For further information on our global trade execution partners please contact our foreign sales desk.

• Trading on the CSE is fully automated
• The Automated Trading System is linked live to the Central Depository System and is fully dematerialized
• Trading Hours : 9:30 am to 14:30pm (local time)
• Market Pre-Open : 9:00 (Closing price = VWAP of trades executed within the last 1 hour of trading)
• Time in Force : GTC orders valid for 5 days
• Minimum lots size : 1 share
• Minimum tick size : 10 cents
• Disclosed quantity is permitted but must be > than 25% of order size that is entered

Crossings (Block Trades)

• Crossing can take places for trades on a particular security > Rs. 20mn or for quantities > than 5% of the issued quantity of the security
• Crossings once entered cannot be amended but can be cancelled by the broker
• Unmatched crossing expires in 15 mins
• Crossings cannot take place at a price that is >5% below the previous closing price. There is no upper price limit on crossings.

Trade Settlement

• Single Tier Settlement : T+3
• Official Trade confirmations are emailed to the end client and local custodian approx. 45mins after close of trading seeking affirmation of trade.
• Local custodian settles with broker on T+3 upon receipt of trade affirmation at T+1. If affirmation is not received by the custodian before banking hours close on the next market day, the trade gets rejected.

Cancellation of Executed Trades

• Executed orders can be cancelled upon consent of the CSE and mutual agreement of both brokers provided the CSE is notified before market closes.