The Colombo Stock Exchange (CSE) launched a Central Counterparty (CCP) framework for equity transactions, a transformative development that significantly enhances the safety, efficiency, and global competitiveness of the domestic capital market.
To commemorate this milestone achievement a special market opening ceremony was held on 1 August at the iconic trading floor at the CSE.
CSE Clear (Pvt) Ltd., a fully-owned subsidiary of the CSE, will serve as the Central Counterparty (CCP) for all equity transactions executed on the CSE, and also as the licensed clearing house regulated by the Securities and Exchange Commission of Sri Lanka (SEC).
The CCP enhances efficiency and trust as investors will have the comfort of finality of settlement and minimising the counterparty risk through the CCP mechanism.
The market opening ceremony was attended by key stakeholders of the capital market including representatives of the Securities and Exchange Commission of Sri Lanka (SEC), Central Bank of Sri Lanka (CBSL), Stock Brokers, custodian banks, and senior officials of CSE, CSE Clear and the CDS.
CSE Clear (Pvt) Ltd. Chairperson Arjuna Herath said: “From now on, the CCP will act as the counterparty to both buyers and sellers, ensuring the delivery of securities and funds regardless of individual defaults. The CSE has steadily enhanced its post-trade infrastructure in recent years, starting with Delivery vs. Payment (DVP) in 2021, followed by Stock Borrowing and Lending that same year, regulated short selling in 2024, and the transition to a T+2 settlement cycle.
With the launching of a CCP, we are now preparing to introduce derivatives and have already applied for a license from the SEC.”
SEC Chairperson Prof. H. Dissabandara said: “This achievement is the result of years of collaboration and perseverance between the SEC, CSE, and several key stakeholders, including the World Bank. The regulatory framework, the clearinghouse rules, and the market infrastructure have all been designed in alignment with international best practices, including the Principles for Financial Market Infrastructure set by IOSCO.
“The CCP will bring tangible, immediate benefits to all market participants: Retail investors gain security and confidence from guaranteed settlement, Institutional and foreign investors will be drawn to a safer, more efficient post-trade environment, Brokerage firms will experience smoother clearing processes and reduced risk. And, more broadly, this CCP framework will fortify Sri Lanka’s financial architecture, enabling it to withstand shocks and facilitate innovation.”
CSE Chairperson Dimuthu Abeysekera said: “The implementation of a CCP marks a defining moment in our journey to elevate Sri Lanka’s capital market infrastructure to globally recognised standards. As a stock exchange, we are already at the forefront in terms of technology, and this framework now brings our post-trade environment on par with leading international markets. It enhances market integrity, reduces systemic risk, and sets the stage for the introduction of new asset classes such as derivatives and futures.”