Strategic plan, transformational map to bolster Colombo Bourse: CSE Chief

Colombo Stock Exchange (CSE) Chairman Krishan Balendra is confident that a new strategic plan and a transformational map underway along with a host of ongoing initiatives will bolster the Colombo Bourse.

“The CSE began the formulation of a new medium-term strategic plan in 4Q2011, with the aim of strengthening core capabilities and infrastructure. We are on track to launch our transformational map in early 2012. The pursuit of these initiatives will enhance the functions of our Exchange and position the CSE as an attractive and user-oriented market,” Balendra said in the Chairman’s Review of the CSE’s 2011 Annual Report released ahead of the Annual General Meeting scheduled for 28 June.

According to Balendra, laying in place a cohesive risk infrastructure, implementing state-of-the-art technologies, enhancing products, optimising attractiveness as a vehicle that meets domestic demand for investment and capital raising, enhancing Sri Lanka’s position as an attractive destination for foreign investment, restructuring organisation and processes and improving governance are all aspects that have been considered in CSE’s transformational plans.

He also said that in the new post-war environment of growth, the CSE is working towards operational improvements with a focus on a development agenda which benefits all its stakeholders.

The CSE 2011 Annual Report has revealed negotiations initiated by the Exchange and Standard & Poor’s Financial Services LLC in launching a co-branded index.

“A credible and transparent index would positively impact the market by providing visibility and better pricing and serve us well in attracting the foreign investor. A credible index also forms the foundation for exploring the previously unchartered territory of index linked products as well as cross exchange alliances. These are elements which would in the future help us establish revenue-raising avenues in the context of the Exchange’s business model, particularly relevant for a profit-oriented setting,” Chairman Balendra said.

The CSE Chief also said better risk management as a critical and urgent need has been identified. “The implementation of the Risk Management System (RMS) was commenced in November 2011. Having completed system development and backtesting activities with the assistance of the National Stock Exchange of India, this margin based RMS has been deployed at the Exchange as at date for training and familiarisation by internal users prior to participant engagement.”

“In the backdrop of this new RMS, we will also review the manner in which the Delivery Versus Payment (DVP) mechanism can best be introduced to the market. The ultimate goal is to introduce Central Counter Party (CCP) based post trade services,” the CSE Chief added.

In his review, Chairman Balendra also noted that during these difficult economic and market climes worldwide, reinforcing investor confidence was of great importance to the CSE.

“We will in this endeavour continue to work in close contact with the Securities and Exchange Commission of Sri Lanka (SEC) to ensure that our market is fair and transparent with balanced regulation being the pragmatic standard, rather than the imposition of regulatory burden,” CSE Chief added.

The All Share Index of the Colombo Stock Exchange (CSE) in 2010 dipped by 8.5%, the first negative return in three years after 2009 and 2010 produced Asia’s best performance. So far this year, the ASI is down by 22%. However in terms of funds raised via the Bourse, 2011 was a record year with Rs. 60.5 billion as against Rs. 44.5 billion in 2010.