CSE transaction cost to be reduced:
SEC to improve CSE structure
Encouraging decision for investors:
The Securities and Exchange Commission (SEC) will improve market
microstructure of the Colombo Stock Exchange (CSE). Securities and
Exchange Commission (SEC) Director General, Channa de Silva told Daily
News Business that this was an encouraging decision for the investors
and fundamental changes like this were required.
Director General, Channa de Silva |
The crossing threshold will be increased from Rs 10 million to Rs 20
million. The tick size on transactions will be reduced to 10 cents
across the board.
The threshold for negotiable brokerage will be reduced from Rs 100
million to Rs 50 million. The minimum brokerage floor will be 0.15
percent.
The SEC Cess, CSE fees, Central Depository System (CDS) fees and
Government levy are to remain unchanged as per the existing structure
for negotiable trades.
De Silva said that the two band fee structure which exists at present
will be removed.
There will be one band for transactions up to Rs 50 million. Once the
change is effective the total transaction cost up to Rs 50 million will
be 1.02 percent.
The Director General said the biggest beneficiaries of this reduction
would be investors transacting less than Rs one million as at present
whose effective reduction is
28 percent, whilst the reduction for transactions over Rs one million
at present is over 16 percent.
It was further decided to revisit and review the changes towards the
end of the year.
The changes to the market microstructure of the CSE including
transaction costs will be active with effect from July 1 this year, he
said.
The reduction of the high transaction costs was a combined effort of
the Securities and Exchange Commission (SEC), the Colombo Stock Exchange
(CSE) and the Central Depository System (CDS), de Silva said.
The Director General said that the reduction of the transaction costs
will show a rapid increase in the trading and it will also make the CSE
more attractive.
Reduction of the transaction cost was the first step and the SEC
would like to move further towards a low cost structure.
This regulatory reform was very meaningful as the capital market is
performing outstandingly and the country’s economy is stabilizing in a
faster manner.
With the reduced transaction cost the SEC expects an increase in the
number of local and foreign investor participation in the CSE and these
developments in the capital market will affect the country’ economy very
favourably, he said.
SEC with the CSE and market stakeholders decided the above changes at
its 257th Commission Meeting held on April 23 this year.
CdeS |