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By Chamitha Kuruppu

The introduction of Real Time Gross Settlement (RTGS) and Scrip-less Securities Settlement System (SSSS) will help to make Colombo an attractive financial centre where people can get a good return for their money, Governor Central Bank of Sri Lanka A.S. Jayawardena said.

Stressing the importance of the debt market Jayawardena said that Sri Lanka is one of the pioneers in South Asia to introduce the real time gross settlement and many other Central Banks in the region will follow Sri Lanka and will introduce such new methods. The Governor addressing a seminar on the Scrip-less Securities Settlement System and Current Economic Outlook stressed the importance of the debt market and outlined how the debt market will benefit by the RTGS and SSSS.

The new system will be introduced in September.

Awareness programs will be carried out to educate Primary dealers, investors of government securities and the public about the scrip-less securities settlement system before its commencement in September.

The seminar was organised by First Capital Treasuries Limited. The institution was appointed as a primary dealer by the Central Bank of Sri Lanka recently.

With the introduction of scrip-less security settlement system all accounts at the Central Depository System (CDS) belonging to primary dealers and licensed commercial banks will be in electronic form and settlement of transactions will be done online.

Superintendent and Registrar of the Public Debt Department K.G.D.D. Deerasinghe said that the new system will eliminate the high risk faced by primary dealers and customers at present.

The present inefficient system due to lack of infrastructure is expected to be more convenient. It will also increase potential liquidity of instruments and market volumes subsequently.

The new system will require scrip-less issues of new Treasury Bills and Treasury Bonds. However, dematerialisation of existing securities will take time. According to Deerasinghe the public will be informed about the dematerialising process.

The Central Depository System will have computer based records of holdings and customer based depository where primary dealers and commercial banks are participants. Investor accounts will be maintained by primary dealers and commercial banks and the CDS will directly confirm transactions and holdings.

The new system will make primary dealers and commercial banks in the CDS act as custodians of clients. The record ownership or transaction details will be known to the primary dealer of the investor.

Types of transactions that will take place under the new system will be outright, delivery free and receive free, repositioning and repo and reverse repo which are very well known to dealers and investors.

The SSSS will also require a SWIFT connectivity for participants, where messages regarding transactions will be only done through SWIFT.

It will also need Intraday Security Facility (ILF) for settlement. By the end of the day ILF will reduce to zero. "Therefore overdues for the day will not be carried overnight," Deerasinghe said.

Customers will have an International Security Identification Number(ISIN) for identification.

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