• Investor account opening process to be upgraded
• Fully-fledged E-IPO system on the cards
• Account opening for Foreign Funds have been expedited
• E-Voting to be implemented this year
The breakthrough for Central Depository Systems (Pvt) Limited (CDS) was made in 1991 when it was established by the Colombo Stock Exchange (CSE). 2016 marks a corporate milestone for the CDS, as it is the 25th year of operation since inception. When first launched in 1991, CDS was the first depository in South Asia and among the first few depositories globally. In this in-depth interview, Nalin Fonseka, Head of CDS speaks on operations at the CDS and future plans.
Q: What is the role and significance of the CDS over the years?
A: It is a known fact that an efficient and dynamic depository contributes to a proficiently functioning capital market. In that regard, we have played a crucial role in the Sri Lankan capital market by minimizing risk, reducing costs, ensuring safety of investor assets and by providing value added services to investors. Over the years, we have evolved to meet the changing dynamics of the Sri Lankan capital market where we have embraced technology, built on our foreign relations and maintained focus on our stakeholders. We will continue this crucial role as the Sri Lankan capital market grows.
Q: How has the CDS embraced technology to offer value to your stakeholders?
Expanding on value offered to our stakeholders by embracing innovation has continued to be a key objective of the CDS over the years.
In 2015, we launched the Settlement Schedule Digitization Solution DS3, which was an innovation entirely driven by CDS. This solution provides a mechanism to digitally sign settlement schedules using digital signatures embedded in a USB Crypto token which can be downloaded by the settlement banks through a web portal. Currently we are performing live operations through DS3 with three settlement banks.
In the perspective of our account holders, we recently launched SMS alerts and eStatements, adding a new dimension to information dissemination. The SMS alert service offers investors the ability to verify their account activities on a daily basis and this service will enhance the transparency in the order execution process of the stockbrokers. The CDS eStatement on the other hand, offers account holders the ability to access their statements at the click of a button. These endeavours encourage investors to take an active role in the management of their investment portfolios and illustrate the value technology offers in the business that we are in.
Q: Could you elaborate on the importance of bridging the gap between investors and the CDS using eConnect?
A: I believe that ease of connectivity always matters when offering value to customers. Bridging the gap between investors and the CDS has long been an objective of ours, and the CDS eConnect facility will play an important role in that regard.
eConnect will take accessing of CDS account transaction details to a new level because of the accessibility through personal computers, Tablet PCs or Mobile devices. We will be able to enhance client security, offer convenience and create immediate awareness on changes to the CDS account details through this service. Especially from the perspective of the foreign investors, this would provide a platform for them to verify both their account information and portfolio information, which simplifies the process to a large extent.
Q: What other process improvements are you looking at?
A: Upon the successful implementation of the state-of-the-art depository system, CDS is currently working on a project to upgrade the investor account opening process. This initiative will decentralize the account opening process and enable broker firms to open client accounts from their offices without sending the documents to the CDS. With this de-centralization, both investors and brokering firms can enjoy more flexibility. This will also bring the CDS to be in-par with other depositories in the region.
We have also taken steps to expedite the process of opening accounts for Foreign Funds, as the CSE makes a conscious effort to increase foreign investor participation in the Sri Lankan capital market. We have worked under the guidance of the Securities and Exchange Commission of Sri Lanka (SEC) when implementing this improvement. Foreign applicants (Funds) can now open CDS accounts within a period of two market days upon the submission of the relevant documents.
Q: Do you have plans to expand the services offered through the CDS?
A: As I mentioned earlier, the improvements we make in future will be strictly stakeholder focused and will be in-line with the vision of the CSE. We are looking at introducing a fully-fledged E-IPO system. This system will facilitate inward and outward payments from investors efficiently and will offer other benefits such as facilitation of allotments for different categories of investors. The overall IPO handling process would be short cycled with the implementation of the E-IPO system.
E-Voting is another new project which is underway and has been planned to be implemented during this year. This system will address the problems faced by investors who are unable to attend and vote in more than one meeting held by listed companies on the same day.
All-in-all, I believe that we are well placed to provide a full range of post trade services to meet the evolving needs of our stakeholders while maintaining a strong focus on operational efficiency. Our intention is to drive continued growth in the Sri Lankan capital market through the provision of world-class custody and settlement services.