Business
Temporary closure of share trading based on pragmatic considerations – CSE
By Sanath Nanayakkara and Hiran Senewiratne
Colombo Stock Exchange (CSE) said yesterday that it recommended the Securities and Exchange Commission (SEC) to temporarily close trading activities of the CSE based on ‘uncertain’ information, yet with a most pragmatic view of the unprecedented crisis situation in the country, with its statutory obligations and overall investor protection at heart.
CSE Chairman Dumith Fernando, CEO Rajeeva Bandaranayake and Director Dilshan Wirasekera made these comments at a press briefing held to explain their decision to halt the business of CSE for five days from April 18 to April April 22.
CSE Chairman Dumith Fernando said,” We accept that there is no answer that is 100% or 100% wrong. There are parties and individuals some supporting the decision and some others opposing it. This was a difficult decision. We have multiple stakeholders. It is the responsibility of the CSE to give the general public the key factors that led to this decision.”
He further said:
“CSE needs to be consistent with the duties and responsibilities placed on the Board by the new SEC Act. In this context, we are obligated to ensure the long term sustainability the stock market. So we have to look at the evolving events and act to ensure the long term sustainability of the stock market. And then we need to understand the public interest, particularly in relation to investors. SEC Act stipulates a very clear responsibility to CSE to give particular attention to public interest in terms of investor protection.”
“We used the information available to us to make this decision which is in large part was uncertain information. So it was a tough call, but it being our responsibility, we had to meet with that tough call.”
“We have three primary stakeholders – this is not to ignore other stakeholders – one is the intermediaries, then you have listed companies, the core of the CSE. Thirdly you have investors. There is a broad range within investors; foreign investors, institutional investors, high net-worth investors and retail investors. The Stock Exchange has to look at things in totality and make decisions to protect overall interests of all of these investors. Given the responsibility in accordance with the new SEC Act, this decision heavily leaned on investor protection. In the old SEC Act, there was very little described in terms of responsibilities of the Stock Exchange which dealt with who can apply to CSE, granting of licences, establishing rules of the Exchange, but there weren’t any expressive provisions on the duties of CSE. The new SEC Act is quite clear. According to Section 24 of part two, we need to maintain a fair, orderly, transparent and efficient securities market in Sri Lanka. Two; we need to enhance effective and efficient functioning of the securities market, and thirdly we need to mitigate systemic risks. Those are the objectives of a market institution. Section 27 speaks most specifically about our duties and responsibilities as a stock exchange. It says that it shall be the duty of an Exchange to ensure an orderly and fair market in securities. It further says that the Exchange shall act in the public interest. Having particular regard for the protection of investors should supersede any other requirements. Section 30 stipulates that SEC under consultation with the Exchange can decide to close the market in certain circumstances including natural disasters, or in an economic or financial crises or other similar circumstances within or outside Sri Lanka.”
“There is a statutory obligation for us to look after the public interest especially with regard to investor protection. One of our key responsibilities is to ensure fair, efficient and orderly market. A fair market is one that includes the market that reflects the forces of supply and demand of shares. Not artificial supply and demand. So one factor that we looked at was achieving a natural demand and supply of shares driven by fundamentals. One of the issues that led to the fall of the market in the last month was ‘forced selling’ by margin providers and stockbrokers whose clients have taken shares on credit. Margin providers and stockbrokers force sell when portfolio values of clients go to certain levels which is in fact within the rules. Now the question is whether it’s a fair market. When there is a systemic drive to force sell, actually the selling side outweighs the fundamental interest in those stocks creating an imbalance. Such artificial pressure was one factor we took into consideration. Secondly, to create an efficient market, there has to be efficient information. The news that came out on preemptive foreign debt was followed by an extended holiday. We don’t believe that investors, investment advisors had enough time to digest and understand what the impact of that announcement would be. Without that transparency of information, it is very difficult for investor to have the transparency of efficient information to operate an efficient market.
‘Another factor of a fair market is that a market should remain liquid which means that it is kept open. Our natural instinct is that market should remain open. We don’t believe that the market should remain indiscriminately closed. The market should remain open and provide liquidity- that is the fundamental pledge we have made to our stakeholders. But when you want to provide a fair and orderly market, now there are factors in conflict with each other. To keep the market open, we might undermine some of the other factors that create an orderly market. So this decision was not about one set of pros and one set of cons. So, this decision was made on the fact that we have these duties and responsibilities under the new SEC Act. Disposing of these duties can be an offence under the Act. We had to make this decision based on the unprecedented crisis situation prevailing in the country in order to cool it off and then be able to make more informed decisions and resume fair, transparent trade activites soon.”
Ceylinco Life has been declared the ‘Best Life Insurance Company in Sri Lanka’ in 2024 by World Finance, an accolade that company has won for the 11th consecutive year.
The only life insurance company in Sri Lanka to consistently win this prestigious award, Ceylinco Life is in the company of other 2024 country winners of the calibre of MassMutual (USA), Canada Life (Canada), TAL (Australia), Swiss Life (Switzerland), CNP Assurances (France), China Life Insurance Group (China), Nippon Life Insurance (Japan), Max Life Insurance (India), and National Life Insurance (Bangladesh).
Commenting on its Insurance Awards, World Finance noted that navigating the complex changes across the globe to balance risk and affordability is a key issue for the winners of the World Finance Insurance awards. “This year, we recognise the trailblazers driving the insurance industry forward, showcasing the dedication and creativity that define the profession,” the magazine said.
The World Finance award recognises Ceylinco Life as an organisation that is committed to continuously improving its overall processes, efficiency and relationships to serve customers better.
Winners are chosen after a stringent assessment of multiple aspects of operational performance including underwriting processes and process efficiency; policy maintenance – the process of reviewing clients’ policies, appropriateness of coverage and cost per policy; exposure to risk; customer retention rate; time taken to settle claims; new customer acquisition rate and financial stability – Premium Income, Market share, Life Fund and company profits.
The World Finance Awards judging panel represents the expertise of over 230 years of financial and business journalism, supported by a research team that works round the clock to ensure the award winners are the most deserving in their sector. Additionally, reader insight and experience are relied upon to provide nominations. The judging panel is required to avoid bias towards criteria such as depth of practice and size of the company, in order to get an insight into different geographies and niche areas.
World Finance is a print and online magazine providing comprehensive coverage and analysis of the financial industry, international business and the global economy. The magazine targets an audience of finance professionals and corporate and private investors, but its lucid voice makes it intelligible and essential reading for anybody who wants to understand the machinations of finance in the 21st century. Established in 2007, World Finance’s awards programmes are tailored to provide a comprehensive analysis of the very best in each market.
Adjudged Sri Lanka’s Brand of the Year in 2022 and 2023, Ceylinco Life was also named one of the 10 Most Admired Companies in Sri Lanka in 2023 by the International Chamber of Commerce Sri Lanka (ICCSL) and the Chartered Institute of Management Accountants (CIMA) and was ranked the ‘Most Valuable Insurance Brand in Sri Lanka’ across both life and general insurance categories in 2023 by Brand Finance.
Ceylinco Life has been the country’s leading life insurer for 20 of the 37 years it has been in existence and provides innovative life insurance solutions which offer protection while de-risking the goals and ambitions of the Company’s policyholders.
Text and pictures by PRIYAN DE SILVA
Araliya Packing Lanka (Pvt) Limited, a subsidiary of the Araliya Group of Companies, recently commissioned its upgraded laboratory facility at its factory in Polonnaruwa. The state-of-the-art facility marks a significant milestone in the company’s commitment to delivering high-quality, eco-friendly packaging solutions.
Established in 2021, Araliya Packing was initially created to provide affordable and comprehensive packaging solutions for the group’s flagship product, Araliya Rice. Staying true to its vision of “delivering eco-friendly packaging technology developed with a unique Sri Lankan identity to the world,” the company has since expanded its services to cater to other market leaders in the industry.
The newly upgraded laboratory is equipped with the latest testing equipment, ensuring the superior quality of its packaging solutions, which include a range of innovative non-woven bags. This investment underscores Araliya Packing’s dedication to maintaining high standards and meeting the evolving demands of its clients.
The Commercial Bank of Ceylon is joining hands with the United Nations Children’s Fund (UNICEF) and government partners to improve preschool education in Sri Lanka.The Bank will support the improvement of a pre-school in the Moneragala District in the Uva Province, as a contribution to UNICEF’s work to support government partners to improve preschool education. The partnership will contribute to the Province’s efforts to provide safer, more equitable, quality preschool learning environments.
The programme will include updating and refurbishing the entire school and equipping it with quality furniture and teaching-learning items.
Since 2022, UNICEF with funding from its partners has supported the Provincial Offices of Uva and Central to improve the learning environments of 40 preschools in remote areas.
This private-public partnership represents a new model for bringing partners together to strengthen early childhood education and foster the development of young learners by reaching the most marginalized with quality preschool education.
Education is one of the principal focal points of Commercial Bank’s Corporate Social Responsibility (CSR) commitments. Within this, the Bank’s largest contribution is towards digital technology education in Sri Lanka. The Bank has donated 362 IT labs to schools across all 25 districts of Sri Lanka and has also supported a project to set up 176 classrooms that focus on the STEM (Science, Technology, Engineering and Maths) subjects. Additionally, the Bank was a key partner in the national Smart Schools initiative where 165 schools were equipped with digital learning facilities. The Bank’s “Sipnena” online portal contains digitized school curriculum content, complete with practical videos and presentations to facilitate easy learning for students.
Commercial Bank is the first Sri Lankan bank to be listed among the Top 1000 Banks of the World and has the highest market capitalization in the Banking Sector in the Colombo Stock Exchange (CSE). The Bank is the largest lender to Sri Lanka’s SME sector, is a leader in digital innovation and is Sri Lanka’s first 100% carbon neutral bank. Commercial Bank operates a strategically located network of branches and automated machines island-wide, and has the widest international footprint among Sri Lankan banks, with 20 outlets in Bangladesh, a Microfinance company in Myanmar, and a fully-fledged Tier I Bank with a majority stake in the Maldives. The Bank’s fully owned subsidiary CBC Finance Ltd. also delivers a wide range of financial services via its own branch network.
UNICEF promotes the rights and wellbeing of every child, in everything it does. Together with partners, UNICEF works in 190 countries and territories to translate that commitment into practical action, focusing special efforts on reaching the most vulnerable and excluded children, to the benefit of all children, everywhere. For more information about UNICEF Sri Lanka, visit www.unicef.lk.
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