The Colombo Stock Exchange (CSE) will by next month see gold traded through Exchange Traded Funds (ETF), which are securities that track an index, a commodity or a basket of assets and trading similar to a stock on an exchange, according to officials. “The ETF regulations are now completed and the investors will be able to trade in certain securities such as gold certificates by March,” Malik Cader, Director General of the Securities and Exchange Commission (SEC) told the Business Times.
He added many firms are interested in this instrument with particularly gold ETFs being their focus. He said that an ETF will attract institutional investors into the Colombo market. He also added that ETFs are attractive to most as it will assist traders balance their portfolios. He noted that during the last month daily turnover levels in the CSE have reached Rs. 3.7 billion from the Rs. 2.3 billion seen last year. “This is a 50% growth into the first month of this year alone,” he added.
He said in this backdrop, there are enquiries by Maldivian firms to go public in Sri Lanka. “But our concern will be the enforcement criteria for such firms. We need to have cross border listing, but need to harmonise it with the local listings. So we’re trying to work the nuances at present,” he said. When asked about Hotel Developers being in the default board of the CSE since 1991 for non-submission of financial accounts, Mr. Cader said that the SEC is concerned and that due attention is given to this firm, whose majority stake is held by the Government.
“We’re hopeful that very soon they’ll comply,” he added. He also said that price bands will not be removed by the SEC, but the regulator is considering some concessions. Since 20, September (when the SEC introduced this formula), many securities were slapped with this price curb. He added that this year, the SEC will focus on beefing up the market structure and safeguards.