Depository; infrastructure of a Capital Market

Transcription

1 2015 NEWSLETTER Issue December 2015pository services in Sri Lanka. IN THIS ISSUE Depository; infrastructure of a Capital Market We, the Central Depository Systems (Pvt.) Limited (CDS) are a wholly owned subsidiary of the Colombo Stock Exchange (CSE) and is licensed as a market intermediary and clearing house by the Securities and Exchange Commission of Sri Lanka (SEC). Incorporated on 30 th August 1991, we celebrated our 24 th Anniversary this year. During our voyage we have been a part of remarkable events which changed the course of the Capital Market in Sri Lanka, and have actively contributed to these events. When first launched in 1991 the CDS was the first depository in South Asia and one of the first depositories globally. We are now fortified with a new generation CDS system which features avant-garde technology that supports multi-asset classes and caters to the overall strategic goals of the CSE to improve trading infrastructure. At the launch of the new CDS system in November 2014, CSE Chairman Mr. Vajira Kulatilaka commented defining our goals The CSE was one of the leading Exchanges in the migration to a scrip-less trading environment and today, we seek to maintain that prestige by continuous improvement to our clearing and settlement infrastructure. Further during the 17 th Annual Cross Training Seminar of the Asia-Pacific Central Securities Depository Group (ACG) the Chairman emphasized the importance of Depositories for the functioning of Capital Markets. In the global capital market arena, on which we function, the efficient and robust functioning of central securities depositories is fundamental to the efficient functioning of securities markets. In fact it is the backbone of the securities market. As a key pillar of the Capital market services infrastructure, central depositories are providing more than a supportive role to the global financial market; depositories now use innovative forms of technology to increase efficiency minimize risk and reduce costs in order to support investors and market intermediaries and is responsible for ensuring the safety of customer assets. CDS Hosts the 17th ACG Cross Training Seminar Page 2 CDS signs MoU with NSDL Page 3 ACG Members Visit CDS Page 4 New Operational Initiatives Page 5 Revamping the CDS Website Page 5 CDS eservices Page 6 Provision of Corporate Action Services Page 6 Awareness Program for Broker Firms Page 7 Statistics Page 7-8

2 2015 NEWSLETTER Issue 01 2 CDS Hosts the 17th ACG Cross Training Seminar The 17 th Cross Training Seminar of the Asia-Pacific Central Securities Depository Group (ACG), hosted by the CDS, was held from 11 th to 13 th May 2015 at the Kingsbury Hotel, Colombo. This was the first time the CDS hosted an ACG event. The ACG Cross Training Seminar is a yearly event hosted by an ACG member, planned and managed by the host member and the ACG Task Forces, with the intention of facilitating exchange of information among working level attendees of member institutions. During the two-day conference, the host depository and task forces had sessions on Official photograph of the Participants pertinent areas of interest. The seminar was attended by 95 foreign participants from 22 member organizations and 6 non-member organizations, reporting the highest number of participants so far in an ACG Cross Training Seminar. Stage backdrop of the Cultural Night & Gala Dinner held concluding the event At the beginning of the Training Seminar At the end of the two day seminar two excursion tours were organized for the participants to experience the Sri Lankan culture and heritage together with a glimpse of the country s history. CSE Visit of the 17 th ACG Cross training seminar participants

3 2015 NEWSLETTER Issue 01 3 CDS Signs MoU with NSDL related services, enhancements to the post trade functions and new concepts such as evoting. Chairman of the Central Depository System (Pvt) Ltd (CDS), a fully owned subsidiary of the Colombo Stock Exchange (CSE) Mr.Vajira Kulatilaka and Managing Director and CEO of National Securities Depository Limited Mr. G.V. Nageswara Rao signing the MoU The CDS signed a Memorandum of Understanding (MoU) with the National Securities Depository (Pvt) Limited of India (NSDL) on 8 th May 2015, for the purpose of knowledge sharing in the area of depository services. The NSDL being responsible for the establishment of a national infrastructure of international standards that handles most of the securities held and settled in dematerialized form in Indian capital market. Therefore it was ideal to partner with NSDL for the CDS in its trajectory of growth for future as a leading service provider for the financial services industry in Sri Lanka. The CDS hopes that by knowledge sharing with the NSDL it will strive to adopt industry best practices such as decentralization of CDS operations and reach its diversified goals of being a service provider to a series of stake holders in the capital market while facing emerging market challenges. The anticipated new services where the knowledge sharing is expected include processing corporate action The MoU intends to explore opportunities for cooperation between the two depositories, establish a basis for cooperation in depository and settlement related matters, and establish operational linkage between the two depositories. The MoU also includes regular meetings between the senior management to increase mutual understanding of the business developments of both parties, understanding securities market through exchange of staff and training and conducting join studies or discussion meetings on topics related to securities depository and settlement. We anticipate developing a closer working relationship with the NDSL and other regional Depositories in the future, to maintain channels of communication for exchange of information. We also hope to promote visits for knowledge sharing purposes by Directors, Officers and employees of regional depositories, in the hope of collectively improving industry standards, the Chairman of the CDS Mr.Vajira Kulatilaka said. Mr. G.V.Nageswara Rao, MD & CEO of NSDL, commented NSDL signing MoU with CDS enables both NSDL and CDS to develop association for closely working towards understanding the various means and processes undertaken to minimize risks and to promote equity investment culture amongst budding investors. It will also help share the best practices being used by both countries. Going forward, it will help create conducive atmosphere to increase cross border investments for both countries. Chairman of the Central Depository System (Pvt) Ltd (CDS), a fully owned subsidiary of the Colombo Stock Exchange (CSE) Mr.Vajira Kulatilaka and Managing Director and CEO of National Securities Depository Limited Mr. G.V. Nageswara Rao exchange a token after the signing of a MoU for the purpose of knowledge sharing in the area of depository services. (From left to right) Chairman of the Central Depository System (Pvt) Ltd (CDS), Mr.Vajira Kulatilaka, CEO of Colombo Stock Exchange (CSE), Mr. Rajeeva Bandaranaike and Head of CDS Mr. Nalin Fonseka during the discussions. Officers present at the occasion from the Colombo Stock Exchange (CSE), Central Depository Systems (Pvt) Ltd (CDS) and National Securities Depository Limited of India (NSDL)

4 2015 NEWSLETTER Issue 01 4 JASDEC Visits CDS Representatives from Japan Securities Depository Center, Inc. (JASDEC) visited the CDS ON 12th May A delegation of five JASDEC members including Mr.Yasushi Yoshikawa participated for the occasion JASDEC delegates meeting the Chief Executive Officer and the Chief Operating Officer of Colombo Stock Exchange The JASDEC delegates participated in a discussion with the Chief Executive Officer of the Colombo Stock Exchange (CSE) Mr. Rajeeva Bandaranaike, Chief Operating Officer of CSE Mr. Renuka Wijewardane, Head of CDS Mr. Nalin Fonseka and Assitant Manager of CDS Mr. Nadeera Athukorale. ACG Member Organizations Visit CDS KSD Delegates meeting the CEO of Colombo Stock Exchange Mr.Rajeeva Bandaranaike during the CDS visit During the visit, CDS and KSD were able to share information on their respective operational processes and business portfolios. Both the depositories have taken this opportunity to create future prospects for cooperation KSD Delegates at the CSE trading floor Possibilities in building strategic partnerships were also discussed during the visit together with potential new future operation for CDS in line with their new business diversification plan. NSDL Visits CDS During the visit a discussion was held with the CDS staff to discuss on how the NSDL can contribute to the advancement of the new business initiatives taken by the CDS in line with their strategic goals. NSDL Delegates present at the discussion This was the first official visit NSDL has done to CDS subsequent to the signing of the MoU between the two parties. Expectations of the MoU and the pertinent areas in which both the depositories should concentrate were also conferred at during this visit. MSD Visits CDS Subsequent to the 17 th ACG Cross Training Seminar, the representatives from the Maldives Securities Depository (MSD) took the opportunity to visit the CDS. JASDEC delegates at the Trading Floor of the CSE After the discussion the delegates also observed the CSE trading floor before extending the visit to the CDS premises. KSD Visits CDS Three (Korea Securities Depository) KSD delegates visited CDS on 13 th May 2015, during their participation for the 17 th ACG Cross Training Seminar, to conduct a oneon-one session with members of the CDS. NSDL delegates and CDS representatives during the discussion A delegation of 4 members of NSDL visited CDS on 15 th May MSD delegates during the discussion The MSD representatives called in on 15 th May 2015 to the CDS premises. During the visit the depositories discussed about new avenues to strengthen the business relationships between the two parties.

5 2015 NEWSLETTER Issue 01 5 New Operational Initiatives DS3; Settlement Schedule Digitization Solution The CDS Ceremoniously launched DS3 on 12 th May 2015 during the hosts session of the 17 th ACG Cross Training Seminar at Kingsbury Hotel, Colombo. Unveiling of the product was done by Head of CDS Mr. Nalin Fonseka and the General Manager/ Chief Executive Officer of LankaClear (Pvt) Ltd Mr. Sunimal Weerasooriya. DS3 is a product designed to fulfill CDS requirements of digitizing settlement schedules. It provides a mechanism to digitally sign the settlement schedules using digital signatures embedded in a USB Crypto token which can be downloaded by the settlement banks through a web portal. The CDS successfully went live with the product on the settlement date; 26 th October 2015 with three settlement banks. Consolidated CDS Monthly Statements The amalgamated CDS monthly statement was designed to provide the CDS account holder a compiled view of all the security types; equity and debentures, held in their respective CDS accounts. The securities are displayed in two categories for the ease of reference, separately as equity securities and debenture securities. Phase I of the project was introduced with the 2015 May printed monthly statements, which were posted to the respective CDS account holders. Phase II, which went live with 2015 June monthly statements focused on both the e-statements and the posted monthly statements. Amalgamated monthly statements were introduced in two phases. Revamping the CDS Website The official website of the CDS was revamped during the first quarter of The refurbished website went live on 30 th March Changes done to the site include appearance of the site as well as the content presented therein. Aims of these modernizations were to provide an improved connectivity to the various stakeholders of the CDS, including the brokering firms, CDS account holders, company secretaries and registrars of the listed companies and various other parties interested in information. Further to the developments done to the website the CDS is currently planning to provide certain online facilities using the website as a basis contact terminus.

6 2015 NEWSLETTER Issue 01 6 CDS eservices CDS estatement Facility Keeping in line with the CDS strategy to provide account holders with information in the most convenient and efficient manner, the CDS estatement facility was introduced on the 1 st of August The number of CDS account holders subscribed to this facility has gone up to approximately 8,500 within one year of launching the service. As the CDS, it is our priority to cater to the needs of our customers and provide them their account statements in the most efficient and convenient manner possible. Today s investors are increasingly tech savvy, therefore it is vital that they receive information in a manner that is easily accessible. This ed statement ensures that the investors receive updates no matter where they are stated the Head of CDS Mr. Nalin Fonseka. CDS SMS Alert Facility The SMS alert service, which was launched on 1 st August 2014, enables the CDS account holders the prospect of receiving two daily updates, firstly regarding transactions taking place on their CDS accounts through the Automated Trading System (ATS) and secondly detailing all CDS transactions on their CDS accounts. This endeavor encourages stock market investors to take an active role in the management of their investment portfolios, through timely monitoring of investments. These SMS alerts will enable subscribers to monitor their daily transactions and in turn, clarify with the stock brokers with regard to any discrepancies. Through continuous awareness programs and promotions conducted by the CDS, the subscribed account holders for the facility have reached approximately 8,200 within a period of one year. Provision of Corporate Action Services The CDS has taken the initiative in offering a range of services related to corporate actions, handled by the CDS, for listed companies. Offered services are related to rights issues, subdivisions/consolidations, capitalization of reserves, scrip dividends, share swaps, amalgamations and conversion of warrants in to shares with several value added services. The securities held in the CDS currently has reached a demat percentage of 95% for the listed equity securities and 96% for the listed corporate debt securities. Securities of companies listed after 2011 are dematerialized and this has opened a window of opportunity for the CDS to handle corporate actions since the CDS has the capability of processing data to carry out any type of corporate actions. Among the services offered are; provision of customized reports, preparing direct deposit data and direct deposit error corrections and amendments; apart from the standard functions performed. Also, a customized set of services can be offered as per the requirements of a listed entity.

7 2015 NEWSLETTER Issue 01 7 Awareness Program for Broker Firms The CDS conducted an awareness program for the broker firms during the month of December Statistics of demat securities Statistics of demat account openings The program was conducted as a series of five sessions held for separate groups. 114 participants from 28 broker firms partook for the program. Main objective of the awareness sessions were to provide a conducive platform for the participants from the broker firms to obtain knowledge across a diverse range of subjects and increase the awareness on general operational procedures. The program provided details of the provisions of the Financial Transaction Reporting Act (FTRA) applicable to broker firms and industry specific rules, value added eservices provided by the CDS and benefits of these to the CDS account holders, upcoming eservices such as econnect facility, best practices related to client account opening process and advantages of decentralization to the broker firms and exposure to the revamped CDS website. Equity Shares Statistics De-Mat Securities as at end of the year 2015 Total Volume: 78,685,670,352 Total Market Value (LKR): 2,702,443,089, % De-Mat Corporate Debt Total Volume: 2,197,744,845 Total Market Value (LKR): 232,458,121, % De-Mat De-Mat Accounts as at end of the year 2015 Number of Accounts by Investor Category Local Individual: 581,775 Local Institution: 9,082 Foreign Individual: 4,486 Foreign Institution: 4,899

8 2015 NEWSLETTER Issue 01 8 Securities on Deposit (Volume) by Investor Category Local Individual: 14,021,762,897 Local Institution: 46,386,794,539 Foreign Individual: 1,104,691,701 Foreign Institution: 19,370,166,060 Securities on Deposit (Value) by Investor Category (LKR) (LKR) Local Individual: 418,367,088, Local Institution: 1,699,018,102, Foreign Individual: 39,044,771, Foreign Institution: 778,471,248, Corporate Actions Equity IPOs - 02 Debenture IPOs - 50 ESOPs & Equity Linked Compensation Plans - 46 Repurchases - 02 Capitalization of Reserves - 01 New/Further Issues - 04 Sub-Divisions - 09 Scrip Dividends - 08 De-Listings - 01 Amalgamations - 01 Rights Issues - 15