Stockbrokers collect record profits in 2021 amid low interest regime

• Turnover up 215% to Rs.13.5bn; profits up 260% to Rs.6.38bn

Sri Lanka’s stockbroker industry collected record profits in 2021, with equities becoming the preferred choice for a large number of investors due to the low interest rate regime prevailed during the year.

In 2021, turnover of the stockbrokers rose by 215 percent year-on-year (YoY) to Rs.13.5 billion, while profits increased by 260 percent YoY to Rs.6.38 billion.

In 2021, the Colombo Stock Exchange (CSE) was recognised as the second best performing market in the world with the All Share Price Index (ASPI) witnessing a YoY growth of over 8 percent, recording the highest growth rate witnessed since 2011.

The more liquid S&P SL 20 index also saw a YoY growth rate of over 60 percent. 
Further, the daily average turnover of the CSE also rose to Rs.4.8 billion in 2021, in comparison to Rs.1.8 billion recorded in the preceding year. 

In the year, net brokerage fees, which is the main income source of the stockbroker community, rose 225 percent YoY to Rs.12.76 billion.

“This was largely due to the stock market becoming the preferred choice for a large number of investors, due to the lower bank interest rates prevailed during the year and other progressive steps taken by the government and SEC to develop the capital market. 

Additionally, the digitalisation of the end-to-end operations of the CSE spearheaded by the Joint Committee of the Securities and Exchange Commission (SEC) and CSE appointed by the chairman of the SEC also contributed to this overall growth,” the SEC said in its latest annual report. 

Meanwhile, the SEC revealed that it is in the process of setting up an Independent Tribunal for the purpose of resolving disputes between clients and stockbrokers as well as disputes between clients, stockbrokers and margin providers.

The SEC noted that the Demutualisation Bill of the CSE is yet again being reviewed for certain policy changes and further amendments.

The demutualisation of the CSE will allow the SEC to set up a central counterparty clearing house.