Monday in the Colombo Stock Market (CSE) failed to keep up with its new momentum. The week started with a trading halt and the day ended on a red note. CSE had to halt stock trading after experiencing a considerable lag in the broker systems. The CSE announced that it occurred due to a connection instability at the connection provider’s data centre.
The market was halted for a period of approximately 15 minutes in order to switch to a backup connection. Following the connection switch, the market halt was lifted, and the CSE was able to resume trading at 1.10 p.m. The market ended on a red note that day, with the All Share Price Index (ASPI) closing at 8,536.88, a decline of 3.7%. The turnover was recorded as Rs. 6.7 billion, well below the average turnover of over Rs. 10 billion that the CSE witnessed in the past few weeks.
Two days later, SLT-Mobitel clarified that a hardware change had taken place at the CSE, which had caused a significant lag in the broker systems which led to a market halt on Monday. The data centre service provider of the CSE, SLT-Mobitel, made a public notice providing reasons for the unexpected technical situation behind the market halt that took place due to the connection instability. SLT-Mobitel further noted that it had taken prompt action after experiencing the connection instability issue that took place at the CSE within the least amount of time in order to rectify the connection, adding that the data centres were operated within the usual capacity during the incident.
On Tuesday, the market ended on a green note. ASPI gained 1.8% yet the turnover was below Rs. 4 billion.
First Capital noted, “the index remained bullish in the first half of the session, reaching an intraday high of 8,737 as retailers pounced on battered stocks after a steep fall yesterday. Eventually, the market took a sideways movement and managed to hold the grip before closing at 8,693.”
The next day too the market managed to close the trading session on a greener note. ASPI gained by 2.7% yet the turnover surpassed Rs. 5 billion and closed at Rs. 5.5 billion.
“Index began on an upbeat note and maintained its upward momentum throughout the session, before eventually leveling-off over the latter part of the session to finish solidly in the green, closing at 8,931,” First Capital stated.
On Thursday, the market ended on a red note with ASPI losing by 0.93% while the turnover again fell below Rs. 4 billion to close at Rs. 3.9 billion on that day.
Meanwhile, on the same day, CSE implemented an over-the-counter (OTC) platform in order to facilitate the repurchase (REPO) transactions of corporate debt securities. Circular No. 06-09-2021 further informed CSE member firms and trading members that the platform would be in effect from Thursday (16) onwards with the purpose of implementing an OTC Board to improve the liquidity of the corporate debt market of the CSE by facilitating REPO transactions.
The OTC platform is in fact an addition to the trading of corporate debt securities on the Applicant Tracking System (ATS). It can only be used by the market participant for REPO transactions on corporate debt securities, while REPO transactions are permitted only on the listed corporate debt securities through this OTC platform, the Circular noted.
Two transaction options were considered applicable for REPO transactions carried out on the OTC platform.
Accordingly, under option one, the CSE said that a total fee of Rs. 10,000 is to be paid per REPO transaction taking into account the payments of Rs. 4,500 for CSE fees, Rs. 4,500 for Central Depository Systems (CDS) fees, and Rs. 1,000 for Securities and Exchange Commission (SEC) cess.
Under option two, Rs. 100,000 per month is payable and the number of transactions is unlimited. However, the options are only applicable to the existing members and the trading members of the CSE. The individuals who are licensed by the SEC to deal in debt securities and who are interested in carrying out REPO transactions on corporate debt securities on the OTC platform were urged to indicate their interest in writing to the undersigned on or before Tuesday.
Moreover, such members are requested to provide their email, full name, designation, and contact number in relation to the operations of the OTC platform.