The Colombo Stock Exchange (CSE), in a bid to attract foreign investment, is looking at introducing a global index under the Standard & Poor’s (S&P) banner within a year, a top official said.
“We are looking at introducing a global index within the next 12 months and we are starting work on this soon,” Krishan Balendra, CSE Chairman told the Business Times. He added that a team from S&P will be in Colombo to meet key stakeholders in early November. He highlighted the main reason to introduce such an index was to have a globally recognized brand which will give credibility to the index, in particular to large foreign investors. Mr. Balendra said that S&P, together with the CSE, will develop criteria for inclusion in this index and that the existing indices such as the Milanka and All Share Index will continue to be available. He also said that the systems at the exchange will be upgraded and modernized within a year.
Mr. Balendra added that the CSE will be conducting roadshows both here and abroad over the next year to educate local and foreign investors on the investment opportunities on the CSE. The CSE has also hired Mckinsey Consulting to do a study of the capital markets in the country and recommend a way forward and action plan to develop the capital markets. “Within six weeks we will have an action plan and will implement their recommendations accordingly,” Mr. Balendra explained.
He also said that the CSE has hired the National Stock Exchange of India (NSE) to act as a consultant to implement a risk management system and a delivery versus Payment (DVP) settlement system. “By implementing DVP, both the ownership transfer and payment for securities will occur simultaneously, thus minimizing risk.
The implementation of DVP and risk management practices is to be completed in mid-2012 and will be a first step towards transforming the CSE into a modern exchange on par with the most developed global exchanges,” Mr. Balendra added.