How do you 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 general public 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
• Corporate Debentures
• Government Securities
What is Central Depository Systems (Pvt) Ltd?
The Central Depositors System (Pvt) Ltd is a wholly owned Subsidiary of the CSE. The CDS functions as the Depository and the Clearing House for the Colombo Stock Exchange (CSE).
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 participant organization of the CDS. Participant organizations are your stockbrokers and custodian banks. There are no fees charged for opening a CDS account. Your participant organisation will call for documents to establish your identity, proof of residency and other personal details as required by law. It is possible to open and operate an account on the same day provided you furnish all the required documentation.
Every account will be identified through a unique account number and all correspondence relating to the account including trading and depository activities, will refer to this account number. For local individuals the number assigned will be the National identity card number whereas for Institutional investors the CDS will assign a unique number.
Your CDS accounts should be operated through your Participant organisation, and any requests for changes to your account will have to be forwarded through the Participant.
What is the purpose of my CDS account?
Your CDS account enables you to participate in scripless trading on the Colombo Stock Exchange. Your account will be maintained electronically and will be updated as and when you effect a transaction through your participant..
What is the reason for holding my securities in scrip-less form?
The trading system at the Colombo Stock Exchange is automated and the share certificate you lodge in your CDS account is converted into an electronic format. When you buy securities, your account will reflect the quantity of shares purchased and that the quantity of shares will be removed from the corresponding seller’s account. Thus the process is automated and does not involve an exchange of certificates.
Who is a Participant?
A participant is an organization which has been authorized and registered by the CDS, to act on behalf of investors. There are two categories of participants. Presently there are 20 Member Firms (Stock Brokers) and 16 Commercial banks registered as participants of the CDS
What can I deposit in a CDS account?
Shares, corporate debentures and Government Treasury Bills
Must I open a CDS account?
Yes, if you intend to trade in a security listed on the CSE ,
Can I use a different broker from the one I have been using?
You may maintain multiple accounts through several or all Participant organisations. You can also transfer securities between accounts held with different Participants with the consent of the relevant Participant.
Will it cost me more to use CDS?
No. There is no added cost for the CDS accountholder.
What is the process of depositing securities?
Visit a participant with the certificates you want to deposit..
Be sure you have already opened an account or are ready to do so.
You will be issued with and assisted to complete a Deposit Form.
Sign the form with your usual signature.
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 authenticity of the certificates the shares will be deposited in your account.
Once the shares are in your account you can trade in them.
How do you withdraw shares from CDS
You can withdraw shares from your account, using a withdrawal form that can be obtained from your Participant; the CDS will facilitate the removal of shares from your account so that you may receive a share certificate from the relevant company.
How does Intra- Account transfers occur?
You may also transfer part or all, of your portfolio between accounts opened through different participant firms. Once the Intra-Account transfer is completed and forwarded through the respective participant, the CDS will acknowledge by returning a duplicate of said form. Once checked for accuracy and completeness, the transfer will take effect.
How does Inter-Account transfers occur?
Gifting of securities are permitted between parents and children and between spouses. Prior approval of the Securities and Exchange Commission of Sri Lanka must be sought in order for such transfers to take place. In the instance of death of an account holder, securities may be transferred to the next of kin by submitting the required legal documentation such as the copies of the death certificate, probate etc. to the CDS
What do I get to prove I have deposited securities?
You receive the receipt of the deposit form
You receive a monthly statement if your account has been active for that month.
You receive a quarterly statement if your account has been active during the quarter..
You will receive an annual statement if you either have a portfolio or have at least one transaction during the year.
The statements are posted to your registered address using the regular postal service of the Department of Posts unless other wise determined by the CDS.
How Safe Is CDS?
CDS has taken adequate measures to ensure the security of your shares. The CDS has back up storage facilities and procedures and also has in place a disaster recovery and business continuity plan. The confidentiality of information in all securities accounts are strictly maintained by the CDS and access to accounts are restricted
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