CSE to extend OTC to other debt market products

The Colombo Stock Exchange (CSE)’s over the counter (OTC) platform will be extended for other products after corporate debt securities trading such as repo and perpetual bond transactions are introduced on this platform, officials said.

“The debt market can be expanded to the OTC platform,” Renuke Wijayawardhane, Chief Regulatory Officer CSE told the Business Times recently.

He noted the market operator has plans to extend this platform to other products, thereby increasing the liquidity in the market. The OTC platform was introduced primarily to trade repos as such a mechanism was not available on the automated trading system of the CSE. Considering the large volumes of debt securities being actively traded by market participants outside the CSE's platforms, the market operator observed the opportunity to play a role as a facilitator in connecting securities providers who need to finance their liquidity requirements with cash providers, Mr. Wijayawardhane said. He added that authorised primary dealers, a commercial bank licensed by the central bank, will be admitted as trading members in the OTC platform only to be allowed to trade in repo transactions in addition to the existing trading partners of the CSE who are eligible to trade in debt securities.

The amended rules were approved by the Securities and Exchange Commission and will be effective from February 17. The newly permitted transaction type ensures a minimum cost for both parties who engage in the repurchase transactions.

The start of trading operations will be subject to the new trading members securing a licence from the capital market regulator as a stock dealer and a stockbroker.