Sunday Dec 22, 2024
Sunday Dec 22, 2024
Wednesday, 18 August 2021 00:18 - - {{hitsCtrl.values.hits}}
The Colombo Stock Exchange (CSE) said yesterday that the delay in market opening in the past two days was to ensure that the two broker level systems that had issues in relation to the Delivery Vs. Payment (DVP) mechanism were duly rectified.
“This was the responsible course of action to ensure the functioning of a fair and orderly market,” CSE said, adding that the decision was taken to ensure that all market participants and investors were given an opportunity to fully participate in the trading session, given the importance of the transition to the DVP environment.
It said the introduction of DVP was the most meaningful change to the CSE trading infrastructure in several decades. The CSE implemented the DVP settlement mechanism as scheduled on 16 August.
In a statement CSE said the DVP mechanism was implemented pursuant to extensive testing and industry-wide mock runs being carried out over a period of seven months, involving broker systems. The most recent mock run of the DVP trading environment was performed during the period 5 July to 11 August with the involvement of the CSE, broker systems vendors and stock brokerage firms and resulted in a smooth operation of the market in the test environment.
The CSE said it was pleased that its operating infrastructure and all market participants’ trading systems had worked seamlessly during active market operations during the first two days of the DVP environment.
However, on Monday 16 August, one external broker system vendor had technical difficulties connecting to the CSE’s trading system, resulting in a delay of pre-open session.
Yesterday, the CSE observed certain inconsistencies in the client securities balances of a particular broker system vendor. In order to provide additional time for stockbroker firms to verify their client securities balances, the open auction call session was extended up to 11:45 a.m. and eventually trading commenced at 11:45 a.m.
CSE said its systems were upgraded to facilitate DVP after extensive testing and the broker level systems also underwent similar rigorous testing and several test runs. In addition, the current situation in the country in which many market participants are operating remotely has had no bearing on the issues experienced by broker system vendors mentioned above.
The implementation of a DVP settlement mechanism is a result of a three-year-long project and executed through a substantial amount of planning, hard work and resource allocation as a collaboration effort of all stakeholders; the CSE, SEC the stockbroking community, broker system vendors and other market intermediaries. It is also an essential part of the CSE’s roadmap to modernise and mitigate settlement risk while also enabling new products on the exchange.
The Board of Directors of the CSE has already begun a thorough investigation into the technical difficulties experienced by the broker systems vendors and said it would take firm action to ensure there would be no repeat of such incidents.
