Hello tech enthusiasts, today I’m going to talk to you about 5 Benefits of Digitizing Sri Lankan Stock Market. I wish to bring you back to a previous article done by me about Colombo Stock Exchange in May 2020. In this article I have discussed the technological weaknesses faced by the Colombo Stock Exchange and how these weaknesses have come to light due to Covid -19 pandemic.
I’m glad to say that the Colombo Stock Exchange (CSE) together with the Securities and Exchange Commission of Srilanka (SEC) has taken many impressive steps towards digitization in the recent past to overcome these weaknesses. Let’s take a look at the changes taking place and how it’s going to help the investors as well as the economy of the country.
On September 17, 2020 CSE and SEC launched the Future of Stock Trading with Digitization. This has enabled a fully digitized onboarding system, an e-settlement system and e-communication mechanism.
Online CDS Account Opening
Enabling online CDS account opening is one of the main benefits of the CSE digitization process. Opening a CDS account used to take a week or more and involved filling 14 to 15 pages of various forms. This was time consuming as well as confusing for most of the investors. This process was especially inconvenient for the investors outside Colombo as they had limited access to these documents and information.
Now opening a CDS account can be done fully online. Investors can simply download the CSE mobile App which is available on both IOS and Android versions. These Apps direct the investors to select their preferred broker firm, fill the required information and to submit the scan copies of required documents. The account is open within a matter of hours.
E-Settlements and E-Dividends
Before digitization the investors received their CDS statement via post which reaches them at least after a week from the month end. They received the dividend payments via cheque payments again through post. Usually the investor receives the dividends to their bank account after about two weeks from the payment date.
As per the new developments, it is mandatory for investors to provide their bank account details at the time of opening the CDS account. All the settlement funds and dividend payments will be electronically transferred to the specific bank account of the investor without a delay.
Investors are encouraged to obtain Online Trading access through their respective stock broker. CSE website has provided quick links to online trading platforms of all the stock brokers and investors can have access with their login credentials.
Online trading platform allows the investors to execute share purchases and sales on their own, view and analyze their share portfolio, check the market and access all the required information at their fingertips.
Investors no longer have to depend on their stock broker to execute orders or to access their share portfolio as and when required.
Electronic Statements and Contract Notes.
Prior to digitization, CDS transaction statements and contract notes including bought notes and sold notes used to be paper based and sent via post. With the amended CDS rules, it is mandatory for investors to provide an email address linked to their CDS account.
This has enabled all the communications from CDS and the respective broker firm will be done via email in electronic form.
CSE Website and Mobile App
CSE has recently made significant improvements to their official website. The new website is more interactive with the investors. The website directs the investors to open a CDS account and also gives live updates about the market activities.
The website also includes a lot of educational publications and videos which explains how to start investing in the CSE, how to value shares, how to maximize wealth etc. This information is available as short videos as well.
CSE mobile App also can be considered as a user friendly App. Investors get notification on all the announcements made by listed entities such as dividend announcements, corporate disclosures, financial statements uploads etc. This allows the investors to have the required information about the market at the fingertips in real time.
These new improvements in the CSE with digitization are beneficial in so many ways as follows.
- Can bring significant operating efficiencies to the CSE and improve investor experience.
- Enables all the investors to have market information without a delay.
- Ensure uninterrupted market operation in the event of unexpected external variables such as a sudden locked-down.
- Improves investor confidence
- Create an overall positive impact towards the country’s economy
- Positive impact on environment preservation.
At a time of pandemic fear being surfaced once again, let’s hope digitization of the Colombo Stock Exchange will bring a silver lining to our economy. Kudos to CSE for embracing technology !!!