Colombo Stock Exchange (CSE) is currently in negotiation with Standard & Poor’s Financial Services LLC to come up with a globally accepted equity market index, top CSE officials said.
“We have already initiated decisive discussions, and will be entering into formal agreement shortly, placing Standard & Poor’s Financial Services LLC as a partner in progress, to establish a recognize index at the CSE,” CSE Chief Executive Surekha Sellahewa said.
She also added that a transparent and globally accepted index will play an important role in improving the visibility of the exchange and listed securities enabling to develop new products.
Currently the CSE has two indices; the benchmark All Share Price Index (ASI) and Milanka Price Index (MPI), which consists of shares of more liquid 25 companies.
According to CSE Chairman Krishan Balendra, a credible and transparent index would positively impact the market, providing visibility and better pricing and will serve the market well in attracting foreign investors.
He also emphasized that a credible index also forms the foundation for exploring the previously un chartered territory of index lined 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,” Balendra said.
Meanwhile, Balendra also said that CSE has already earmarked better risk management as a critical and urgent need and therefore will review the manner in which a 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,” he said.
Balendra further said, as reinforcing investor confidence is paramount, the CSE will work in close contact with the Securities and Exchange Commission (SEC) to ensure the market is fair and transparent with balanced regulations being pragmatic standard, rather than the imposition of regulatory burden.
During 2011, benchmark ASI closed 8.5 percent Year-on-Year (YoY) down while MPI fell 25.9 percent YoY. Market capitalization was preserved at just above Rs.2.2 trillion reflecting minimal change from the previous year.
And also, 13 companies listed though Initial Public Offerings (IPOs) during 2011 raised Rs.19.2 billion initial capital in comparison to Rs.4.3 billion raised in 2010, while 16 companies listed equity by way of share Introductions.