Please outline the three most important macro trends that you believe will impact the market infrastructure industry in 2019.
- Global political uncertainty and declining trust in political institutions which may result in greater volatility in capital markets.
- Threats to global trade through the fragmentation of global markets giving way to some form of protectionism may result in a slide towards global trade disorder.
- Developing new business models to adapt disruptive technologies which is set to impact capital market infrastructure providers.
The WFE’s Sustainability Principles (launched in October 2018) and annual environmental, social & governance (ESG) survey show us that more and more exchanges and CCPs are taking a leadership role in promoting the sustainable finance agenda. How is your business taking a more sustainable approach to the financial system?
As a member of the United Nations Sustainable Stock Exchanges (SSE) Initiative, the CSE is committed to promote ESG disclosure and performance among listed companies. In line with the first principle of the WFE’s Sustainability Principles, the CSE embarked on the following initiatives to create awareness of ESG in Sri Lanka in 2018:
- The launch of guidelines to listed companies;
- A partnership with the Global Reporting Initiative (GRI) including conducting a series of four workshops for listed companies with foreign faculty drawn from the GRI South Asia Office;
- A sustainability forum to capital market stakeholders conducted in partnership with a sustainable investment focused international fund;
- A special bell ringing ceremony dedicated to bring awareness to the sustainability initiative.
The CSE will continue to encourage listed companies to enhance the quality, transparency and the timeliness of the disclosure of information through maintaining an appropriate enforcement mechanism through continuous listing rules.
In your view, what’s the technology most likely to disrupt global capital markets in the next 12 months?
- Blockchain technology has the potential to redefine the manner in which exchanges engage its post trade activities.
- Another area is machine learning and Artificial Intelligence with the focus shifting towards intelligent automation of systems rather than robotic automated functions.
What are the key strategic initiatives you’re working on at the moment?
- In terms of Market Development, we are refocusing our efforts on listings. We have broadened the opportunities for new listings by launching a new board for US Dollar denominated securities for overseas companies and a separate Board for companies in the SME sector.
- On the Regulatory Framework we are re-looking at the listing rules framework to facilitate more listings and have strengthened the enforcement rules for continuing listing obligations.
- On Market Infrastructure we are embarking on a project to move to a DVP settlement by upgrading our Depository and post trade technology. The broker back office systems and order management systems have already been upgraded.
- The Depository is redefining its business model by moving to new revenue based corporate action services for the corporate sector.