Video conferencing for CDS verification
Sri Lanka’s capital market regulator has proposed a new method of investor verification– all in a bid to ease the Central Bank (CB) KYC (Know Your Customer) rules when opening share trading accounts online.
The Securities and Exchange Commission (SEC) together with the Colombo Stock Exchange (CSE) has proposed another form of verification – via videoconferencing. “Through videoconferencing we can verify the investor and it will be more authentic. So we have also proposed this method to the CB,” a SEC official told the Business Times.
The digitisation of the Colombo Stock Exchange (CSE) calls for electronic account opening and as it is the KYC guidelines require manual documentation, which is complex to the process. The manual procedure is quite intricate, time-consuming and requires significant manpower.
As banks already have KYC and CDD (Customer Due Diligence) in place when opening accounts, the SEC about two months ago proposed that CSE relies on those account details of an investor’s bank account on KYC for CDS (Central Depository systems) account opening. In addition, this new method was also proposed.
The digital signature is a type of electronic signature that uses an encrypted digital certificate to authenticate the identity of the signer. Digital authentication refers variously to the techniques used to identify individuals, confirm a person’s authority or prerogative, or offer assurance on the integrity of information. E-transaction and e-signature rules are also an important part of the regulatory framework for facilitating digital custom initiatives including submitting trading documents.
Late last month, the SEC approved amendments to the stockbroker rules, CDS rules and public listing rules as part of the market digitalisation initiative to ensure electronic clearing and settlement at the CSE.
Initiated by the SEC – CSE joint committee, the rules will allow the stock market to transition from a paper-based to an electronic- based environment helping investors to open CDS accounts, start trading and make settlements online eliminating visits to stockbrokers. So should another curfew come, it can function smoothly.