The demutualization of the stock exchange is expected to be submitted to the Cabinet and passed in parliament shortly. Chairman CSE Dumith Fernando noted that there were no expected obstacles to the long-delayed demutualization of the exchange. The stock exchange expects to switch to a delivery vs payment system by August 16.
Fernando noted that founding members of the exchange are expected to receive 70% of the equity stake in the demutualized entity. A capital market development fund will be established which will receive 30% of the equity. The capital market development fund shall ensure that the funds collected will be utilized for capital market development.
Fernando was speaking on the sidelines of the announcement of the hosting of the Annual Report Awards by the Chartered Accountants of Sri Lanka on August 3 at the CA Office. Fernando noted that once members receive their equity portion they would be able to trade it freely.
Demutualization would allow better-managed exchanges to take equity stakes in the trading infrastructure of Sri Lankan capital markets and share best practices. Fernando noted that public discourse on corporate actions should be careful to encapsulate the finer details of an entity’s actions. Fernando hailed recent moves by listed entities to have share splits that allowed for a greater level of price discovery and liquidity in the marketplace.
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