CSE Chief says temporary closure was a “difficult but necessary” decision

Colombo Stock Exchange (CSE) Chairman Dumith Fernando (centre) at the media briefing yesterday flanked by CEO Rajeeva Bandaranaike (left) and Director Dilshan Wirasekara - Pic by Ruwan Walpola

The Colombo Stock Exchange (CSE) yesterday described the temporary closure as a “difficult but necessary decision” in the public interest and as a means of investor protection though the move has caused dissent within the capital markets 

industry.

On the advice of the CSE, the Securities and Exchange Commission (SEC) closed the Colombo stock market until 22 April. With last week’s holidays and self-imposed curtailment, the Colombo Bourse will be shut for two weeks.

“We at CSE are for open markets. However, given the unprecedented extreme situation, we deliberated the pros and cons and in the long-term interest, the difficult decision was made,” CSE Chairman Dumith Fernando told journalists.

He said that as per the new SEC Act, there is a greater onus on the CSE to act appropriately when it comes to ensuring fair, orderly and efficient trading. Separately the CSE also has to ensure public interest and investor protection.

Considering these responsibilities, a decision was made to temporarily close the CSE, he added.

In describing the “unprecedented extreme situation” Fernando pointed to the ongoing economic and political crisis, social unrest as well as the Government’s decision to temporarily suspend the servicing of all external debt as of 12 April.

As of 8 April, the market was down by over 30% year to date and the fall worsened in recent weeks in tandem with negative economic and political developments triggering many incidents of forced sales by brokers and margin providers.

“We looked at all the factors in totality. Weighed the benefits and negatives and acted in the best interest of all stakeholders,” CSE Chief reiterated.

Fernando also emphasised that the closure wasn’t to prevent a market crash though he likened the temporary move to an “extended cooling off” period which might mitigate the external factors that influenced volatility.