Budget proposals towards a robust capital market

22 November 2015 06:30 pm

 

• Reforms of the capital market through demutualization ensure that the exchange actually looks into the issues of the market participants rather than satisfying financial intermediaries. The demutualization process of the CSE will happened during 2016. 
• Waive the income tax and withholding tax applicable to corporate debt securities in 2016. 
• Set up a Bond Clearing House primarily for transactions in government securities which could then be extended to other instruments including the corporate debt securities. Allocate LKR 500mn to establish the trading platform under the supervision of the Central Bank. 
• Strengthened, is the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB). 
• Introduce Listed Real Estate Trusts (REITs) providing capital to real estate and infrastructure development and to enable small investors to directly benefit from the growth of the real estate sector. Transfer of real estate assets to a REIT structure that distributes 90% or more of income to REIT unit holders will be exempted from Stamp Duty. Consider the introduction of “Reverse Mortgages”. 
• Examine the issuance of nontraditional bond markets including the Chinese Yuan and Sukuk bonds with the aim of reducing our cost of borrowings. 
• Enabling efficiently and effective operation of the stock market by revising the Securities and Exchange Act to address the regulatory deficiencies in the market. 
• Share Transaction Levy (0.3 percent) and stamp duty on share certificates will be removed encouraging activities in the share market so as to boost the sagging movement of share transactions. 
• Encourage the Stock Brokers to merge to strengthen their capacities and capabilities ensuring the long term development of the Capital markets. 
• Create a new SME board on the Colombo Stock Exchange with less stringent compliance requirements for SME listings. 
• Attract foreign companies to be listed in the Exchange. Local companies listing in the CSE will receive tax concessions for 2 years while the concessions will be extended to 3 years if listed in a foreign stock exchange. Encourage foreign companies to list in the CSE (dollar listing). 
• Implement a commodity exchange regulated by the Securities and Exchange Commission  (Compiled by First Capital)