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| Tuesday, 6 January 2004 |
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SMB to facilitate trading in treasury bills, bonds through CSE Seylan Merchant Bank (SMB) Limited, has become one of the first five institutions to receive a licence from the Colombo Stock Exchange (CSE), to operate on Debt Securities Exchange (DEX) of CSE, which is a new automated debt securities trading platform, the bank said this week. The DEX system offers scripless trading, where all transactions are carried out electronically, eliminating paperwork and providing the investor with a zero risk investment, making physical handing over of treasury bills or bond certificates unnecessary. SMB said the DEX system would create a platform for the public to easily buy or sell government treasury bills or bonds, with the settlement of transactions taking place through the Central Depository System (CDS) of the CSE, beginning January 2004. "The Bank basically acts as an intermediary between the Stock Exchange and the public, with all certificates issued by the Central Bank of Sri Lanka and the CSE acting as custodian," SMB Director/General Manager Rohan Senanayake said. "The licence issued by the Securities and Exchange Commission (SEC) gives us authorisation as a DEX dealer." "The DEX system will pave the way for more people, especially small investors to invest in zero risk treasury bills and bonds, helping to preserve and increase invested capital," he said. Explaining the procedure to invest through the DEX system, Senanayake said individuals would be required to fill up a form to open a CDS account at the bank, after which transactions can take place. The individual thereafter buys or sells treasury bills or bonds by just contacting the bank, and can even issue transaction instructions over the phone. Investors will receive a monthly statement from the Stock Exchange, which will be forwarded to them by the Bank. Once the bonds or bills have matured, the Stock Exchange simply transfers funds to each individual's account. "Many people are not aware of the benefits of investing in government securities. People are investing in commercial banks and other institutions receiving an interest rate of approximately 5 per cent, when they could receive 7 to 7.5 per cent by investing in treasury bills or bonds," Senanayake said. He said the main attraction for investments in government debt securities is the ability to invest in a risk free instrument. The other advantages are a government guarantee on repayment of interest and principal sum invested, higher leverage in the case of borrowings and high liquidity. The IT solutions and systems for the DEX are provided by the CSE and all transactions are done via a radio link. Incorporated in October 1992 as a member of Ceylinco Consolidated, Seylan Merchant Bank Limited is registered by the Central Bank of Sri Lanka as a Registered Finance Leasing Establishment under the Finance Leasing Act No. 56 of 2000. Its subsidiaries include Seylan Merchant Leasing Limited, SMB Real Estate Ltd., and SMB Money Brokers (Pvt) Ltd. |
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