Stockbrokers consent for draft demutualisation bill

By Nishel Fernando

Sri Lanka’s stockbroking community said they are in favour of the draft bill for the demutualisation of Colombo Stock Exchange (CSE) at 60:40 percent split for member firms and 30 percent for the Capital Market Development Fund (CMDF).

“We have given our blessings. It’s now up to the government,” CSE Chairman Dilshan Wirasekara told Mirror Business on the sidelines of CFA Charter Awards Ceremony and Oration held in Colombo on Wednesday. 
He noted that CSE member firms reached a consensus for apportionment of shares of the proposed demutualised CSE at a ratio of 60:40. Earlier, the members firms were pushing for a 70:30 ratio.

The draft bill is now expected to be submitted for the approval of the Cabinet of Ministers. However, some industry players are expecting the upcoming election cycle to delay the legislation process.  

The Presidential election is scheduled to be held sometime between September and October this year.
The demutilisation of the CSE would allow the CSE and SEC to achieve their ultimate target of setting up a central counterparty clearing house.

In addition, the SEC expects the anticipated demutualised stock exchange to bring in more fairness and efficiency to the market, in particular with the involvement of a strategic investor.

Earlier attempts on demutualising the exchange during ‘Yahapalanaya’ regime failed due to disagreements on the ratio split. The CSE is the only major stock exchange in South Asia yet to be demutualised.