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Share market for Beginners


What is the Colombo Stock Exchange (CSE)?

The Colombo Stock Exchange (CSE) is the organization responsible for the operation of the stock market in Sri Lanka. The CSE is a company limited by guarantee duly established in Sri Lanka and licensed by the Securities and Exchange Commission of Sri Lanka (SEC) to operate as a stock exchange in Sri Lanka.

How do I purchase shares?

There are two ways to purchase shares
From a new issue of shares (Primary Market) -
The primary market is the market for new shares or debenture issues. In the primary market, the security is purchased directly from the issuer (company). In a primary issue, the company offering the share/debenture issue publishes a document known as the prospectus. It is an invitation to the generalpublic to buy shares or debentures of that company.
On the Secondary Market through a stock broker -
A market in which an investor could either buy or sell shares, debentures and Government Securities from or to another investor, subsequent to the original issuance in the primary market.

Types of securities traded at the CSE
Shares (Voting and Non-Voting)
Corporate Debentures
Government Securities
Warrants
Closed End Funds


What is Central Depository Systems (Pvt) Ltd?

Central Depositors Systems (Pvt) Ltd (CDS) is a wholly owned subsidiary of the CSE, which has taken over the functions of Clearing, Settlement and Registration from the Stock Exchange.


How do I open a CDS account?

To open a Securities Account in the CDS you should complete an Account Opening Form, which can be obtained from your stockbroker or custodian bank. There are no fees charged for opening a CDS account. Your participant organization may call for documents establishing your identity. It is possible to open and operate an account on the same day.

Every account will be identified through a unique account number and all correspondence and dealings, including trading and depository activities, will refer to this account number.

Your CDS accounts should be operated through your Participant organization, and any changes to your account will have to be forwarded through theParticipant. You cannot issue instructions directly to the CDS.

Getting StartedHome/Getting Started/Getting Started
What is the purpose of my CDS account?

Your CDS account enables you to participate in paperless trading on the Colombo Stock Exchange. Your account will be maintained in double-entry book-keeping format and will be updated on real time as your participant lodges your transactions at CDS.

What is the reason for holding my securities in scrip-less form?

The trading system at the Colombo Stock Exchange is fully automated and thereby the paper securities you lodge in your CDS account are translated into an electronic portfolio. When you buy securities, your account is automatically credited with the shares purchased and the corresponding seller's account is automatically debited with the same amount. Thus the entire process is automated and involves no exchange of bills or certificates.

Who is a Participant?

A participant is a central depository agent, either a stockbroker or a custodian bank, who has been authorized by CDS to open accounts in CDS on behalf of investors.

Who are stockbrokers?

Stockbrokers are registered members of an Exchange, authorized to buy and sell shares. These stockbrokers provide their services to the investing public interested in trading in shares of listed companies.

What do I deposit in a CDS account?

Shares, debentures, warrants, government securities and units of closed end funds

Must I open a CDS account?

Yes, if you intend to trade in shares, which have been selected for depositing, through the Colombo Stock Exchange.

Can I use a different broker from the one I have been using?

You may maintain multiple accounts through several Participant organisations. You can also transfer securities across accounts held with different Participants.


Will it cost me more to use CDS?

No. There is absolutely no increase in cost for the CDS accountholder.

What is the process of depositing securities?

Visit a participant with the certificates you want to immobilize.
Be sure you have already opened an account or are ready to do so.
You will be issued with and assisted to complete a Security Deposit Form.
Sign your form with the signature used when buying the shares.
Return the form to the participant together with the certificates you have included on the form to be deposited.
You will be given a receipt as evidence of your deposit.
The participant will forward the form and the certificate to CDS
CDS will forward the certificates and forms to the company’s shares registrar for verification.
When the registrar confirms the certificates as genuine, the shares will be deposited in your account.
Once the shares are in your account you can trade in them.

More Information on www.cse.lk

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