Sri Lanka share trading costs still high, volumes low

ECONOMYNEXT – The removal of a government share transactions levy from January 1 will lower the cost of buying and selling on the Colombo bourse but overall trading costs remain higher than regional markets, brokers said.

Colombo Stock Brokers Association President Ravi Abyesuriya said the removal of the 0.3 percent share transaction levy from the buyer and seller would encourage trading.

“That would definitely help all buying and selling of shares significantly,” he said.

Under the CSE’s new fee structure, total transaction fees on equities up to 50 million rupees would be 0.82 per cent, down from 1.12 percent, while the fees for trades over 50 million rupees would be 0.31 percent with the minimum brokerage fee being 0.20 percent.

But Abyesuriya noted that even after the removal of the levy Sri Lanka’s share trading costs are still high compared to regional markets.

“This is because our share trading volumes are also very much lower than other markets like India, Malaysia or even Bangladesh whose trading volumes are huge,” Abyesuriya said.

“So our transactions costs are high as a result of low trading volumes. We want the country to move into higher volumes of trading and one step already taken is the government’s removal of the share transaction levy.

Daily turnover on the Colombo stock exchange fell to 1.1 billion rupees in 2015 from 1.4 billion the year before.

The highest daily share market turnover in Sri Lanka was 22 million US dollars reached in 2010 with India by comparison doing 37 billion dollars that year.

“Trading costs in India are definitely lower but their trading volumes are much, much higher and fees are not regulated but market determined,” Abyesuriya said.

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“Market determined rates are possible if share trading volumes increase. The biggest problem in Sri Lanka is that daily trading volumes are very, very low, current around only 7-8 million dollars.”
(Colombo/January 11, 2016)
 

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