SEC all for slips

Charumini DE SILVA

The Securities and Exchange Commission of Sri Lanka (SEC) will improve the stock market making payment settlements much more effective.

Securities and Exchange Commission Capital Market Development and Research Director Vajira Wijegunawardane said the commission is currently having discussions with the industry to encourage the use of slips rather than using cheques for transaction settlements, as it will benefit all stakeholders of the capital market.

"The transactions that are settled through cheques take at least two to three days to convert into cash. The use of slips will make the entire payment settlement process of the stock market more efficient. At present, there are payments settled via slips, but a very small percentage compared to the use of cheques," he said.

Wijegunawardane said the SEC is encouraging the use of slips since it would greatly benefit the entire market and make it more productive.

This will reduce the burden on settling the Initial Public Offering (IPO) payments, dividend payments and all the other transactions.

The CSE will set up the Clearing Corporation under the regulatory purview of the SEC to minimize CSE settlement risks. The requirement of the Clearing Corporation is much felt and the SEC will support the CSE to fast track the setting up process of it.

"The financial strength of the Clearing Corporation matters most and this will ensure that foreign and local investors reduce the risk of their transactions in the capital market. Having a Clearing Corporation would drastically reduce the risks in the stock market transactions," he said.