The Securities and Exchange Commission (SEC) is tapping the world to select the best party to set up and operate the country’s first full-fledged multi-asset class Commodities Exchange.
The invitation for Expressions of Interest (EOI) had been placed in the globally influential and widely read The Economist issue of Saturday in addition to local papers. Currently there is no standard platform for trading commodities and derivative instruments and having recognised its necessity in the post-war era with economy and capital markets booming, the SEC is inviting EOIs from eligible interested parties by 29 April to set up and operate a Commodities Exchange. Ideally such an Exchange should facilitate spot and futures trading of multi-asset classes and needs to be incorporated as a demutualised limited liability corporate entity.
As per the EOI invitation, the party should adhere to global best practices and standards and accommodate all necessary components of a commodities exchange including mechanisms for clearing and settlement of the instruments traded.
SEC is inviting expressions from those who have a proven track record of not less than five years in establishing and operating exchanges of this nature. Additionally such parties should be currently licensed to operate at least two exchanges. The licensed party should be financially sound with minimum net assets or shareholders funds of at least US$ 100 million. Foreign parties are required to submit proposals in partnership with a Sri Lanka entity or entities whilst the SEC has also made provisions for a Sri Lankan corporate entity to submit a proposal in partnership with a foreign party that meets the eligibility criteria.
SEC in its notice said that at present the country enjoys a vibrant stock market and a Government securities market backed by political stability and strong economic fundamentals and that the country is on a high growth trajectory.