The Colombo Stock Exchange (CSE) is finalising plans to launch a dollar trading board, part of a broader strategy to develop Sri Lanka’s bourse into a regional capital markets centre and boost the inflow of foreign funds.
In mid-July Ray Abeywardena, Chairman of the CSE, announced that the Exchange had received regulatory approval to launch a dollar trading board for foreign investors by the end of the year. This would allow shares of listed firms to be quoted and traded in US currency rather than the Sri Lankan rupee.
According to the initial plans, only foreigners will be allowed to buy and sell shares on the new board, meaning non-resident and resident foreign currency account holders will be excluded.
The new board should create opportunities for regional companies to trade on the CSE, with the platform to be opened up to domestic firms at a later unspecified date, Abeywardena told the Oxford Business Group (OBG).
While some trade and listing restrictions are in place, officials have said that multinational companies operating in Sri Lanka may list on the dollar board. The CSE currently has 295 companies listed on its main and secondary boards, covering 20 separate business sectors.
The introduction of the dollar platform is part of wider efforts by the CSE to increase the number of foreign listings on the bourse, with the aim of enhancing the visibility of Sri Lanka’s capital markets and strengthening the country’s position as a regional player, a move that would, in turn, boost the inflow of foreign funds.
One such potential market for new listing opportunities is the Maldives, according to Vajira Kulatilaka, CEO of NDB Capital. “Various companies within the region, but particularly companies based in the Maldives, have shown increased interest in getting listed on the CSE,” he told OBG.
Rajeeva Bandaranaike, CEO of the CSE, told OBG, “The Exchange is looking at diversifying its product portfolio so that investors would have a greater range of capital market instruments.”
Among the measures being used to attract more local and foreign investment is the introduction of real estate investment trusts, Bandaranaike announced at an industry event at the end of August.
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