CSE issues RFI for setting up a Central Counter Party

Marking a significant step in its bid to establish a Central Counter Party (CCP), the Colombo Stock Exchange has issued a Request for Information (RFI) inviting potential suppliers to present information with relation to the supply, implementation and support for a Central Counterparty Institution. 

Engaging potential suppliers and offering the opportunity for a long-term partnership is a key step in CSE’s bid to seek suppliers with proven international expertise in carrying out similar projects.

The establishment of an institution to act as a Central Counterparty for all secondary market transactions was announced by the CSE as a key initiative in its strategy to grow into a world-class stock exchange. Central counterparties are the globally accepted mechanism for minimising settlement risk and utilise a Delivery Vs Payment (DVP) settlement environment where securities and funds are exchanged simultaneously.

At present, capital market institutions in Sri Lanka use an Automated Trading System (ATS) for trading, and the Central Depository System (CDS) as a depository and for clearing and settlement. The new CCP system is expected to improve market integration and address key risk elements, including guaranteeing the settlement of cash and delivery of securities for all secondary market transactions.

The RFI document containing a description of eligibility criteria, the scope of work and other relevant information is available for download at the CSE’s website, www.cse.lk. Respondents to the RFI will receive a detailed Request for Proposal (RFP), with the project being offered to a suitable party under an initial contract for five years.

The successful completion of the initial phase of the project to identify business requirements and develop an Inception Report has paved the way for the CSE to issue the RFI.