Located in Colombo, Sri Lanka, the Colombo Stock Exchange (CSE) was established in 1985, superseding the previous Colombo Brokers Association. The trading system is now the largest and most advanced stock trading agency in South Asia with over two hundred companies listed. The CSE sports the following automated features:
1. Central Depository System.
2. Automated Trading System.
3. Debt Securities Trading System.
The CSE is on the leading edge of financial technology with Web based trading protocols and up to the minute spot prices displayed throughout the trading day.
Since the end of the Sri Lankan civil war in 2009, the CSE has grown considerably. The 2009 figures presented by the CSE indicate assets in excess of 13 billion US dollars and a net profit of 1.5 million dollars for the year. The World Federation of Exchanges rated the CSE as the best performing stock trading place for the fiscal year of 2009.
Mr. A. N. Fonseka, Chairman of the CSE in 2009, attributed the exceptional growth of the trading system to two primary factors. Government leadership brought a new sense of stability to Sri Lanka which Mr. Fonseka does not recall experiencing for decades. This new stability reassured business people that their investments were more secure than they would have been in years past.
The second major factor that Mr. Fonseka considers in evaluating the growth of the trading place is an economic recovery between the start and end of 2009. This recovery gave business a huge boost and encouraged business people to invest more freely than they had at the beginning of the year.
Mr. Fonseka also discussed several factors that may limit growth of the CSE over the next few years. Among the many issues mentioned by the chairman, low market liquidity and high levels of broker risk stick out as dangerous concerns. Attempts to quell these potentially damaging issues are being considered by the CSE board of directors.
Brokerage rates remain the highest in the region because efforts to trim the rates apply only to large trades while the majority of CSE trades are too small to be affected by the new SEC Commission rules. The CSE is encouraging members to independently limit the brokerage fees associated with small trades so as to spark additional growth in the CSE over the next several years. The problem of brokerage rates is compounded by the limited number of brokers involved in the trading system. The CSE hopes to entice more brokerage firms to join the trading floor, thus increasing trade prospects and lowering brokerage rates as a consequence of greater supply.
Still, it seems that the limited number of brokers involved in the trading system has aided the CSE in avoiding the turmoil of recent global economic downturn. The trading floor was lean and quick to adapt, thus the damaging effect of outside influence was largely deterred. Strong leadership enhanced the adaptive strategies of the CSE. Consistent attention to the vast issues facing the CSE has imbued confidence in the board of directors. Determination to build on the success of the past while quelling inherent challenges ensure the Colombo Stock Exchange a place of lasting prominence in the World Federation of Exchanges.
Author Resource:-
Learn more about the history and growth of the Colombo Stock Exchange now in our guide to all you need to know about the Colombo exchange on http://www.stock-market-today.net/2010/05/comparison-of-colombo-stock-market-cse.html
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