COLOMBO STOCK EXCHANGE
Q: What key drivers led Central Depository Systems (CDS) to surpass a million accounts and what does this milestone reveal about the rise of retail investor participation in Sri Lanka’s capital market?
A: Surpassing one million accounts is a landmark achievement that reflects a dramatic rise in retail investor participation in Sri Lanka’s capital market. This growth has been driven primarily by the digitalisation of the Colombo Stock Exchange (CSE), which has made market access easier and more inclusive than ever before.
Digital tools such as the CSE mobile app and CDS eConnect portal have transformed how individuals interact with the market – offering real-time access, seamless onboarding, transparent account management, e-statements and SMS alerts, greatly lowering barriers to entry.
A pivotal catalyst was the introduction of online account opening facilities in 2020, replacing cumbersome processes with fast, fully digital onboarding. This brought the stock market to the fingertips of the public, accelerating a surge of investors nationwide.
The success of the 2011 full dematerialisation drive – now with 97 percent of listed equity and all corporate debt held in scripless form – created the infrastructure necessary to support mass retail participation.
Together, these drivers reveal a powerful trend: Sri Lanka’s capital market is becoming increasingly democratised – with broader financial inclusion, growing market literacy and increased retail investor participation.
Q: How has the role of Central Depository Systems evolved from a traditional securities depository to a mainstay of Sri Lanka’s capital market infrastructure? And how critical is it to ensuring market integrity, settlement efficiency and investor confidence in the CSE?
A: The role of CDS has evolved considerably from its origins as a traditional double entry securities depository into a pillar of Sri Lanka’s capital market infrastructure.
When Central Depository Systems was launched in September 1991, its mandate was to act as Sri Lanka’s sole custodian for listed securities, and facilitate settlement and safekeeping on behalf of investors.
Over time – as global market expectations shifted towards greater speed, transparency and digital convenience – CDS transformed into a central pillar of the country’s capital market infrastructure.
Central Depository Systems now performs a far broader function within the Colombo Stock Exchange ecosystem alongside CSE Clear, the country’s first central counterparty (CCP) for the clearing and settlement of equity trades.
It has diversified into registrar functions for new issuers, e-IPO facilitation, and virtual and hybrid AGM support – while also strengthening its digital backbone through automation, AI and robotic process optimisation.
Through the CSE mobile app and CDS eConnect – which give investors instant portfolio access, SMS transaction alerts and real‑time announcements – investors receive a fast, confidence building interface.
As a result, Central Depository Systems plays a systemically important role in ensuring market integrity, settlement efficiency and investor confidence. Its secure custody of all listed securities, large account base, and longstanding record of reliable settlements underpin trust, reduce risk and support liquidity in the market.
Overall, CDS has become an indispensable infrastructure enabler – driving transparency, operational resilience and the continued growth of Sri Lanka’s capital markets.
Q: How have initiatives such as e-dividends and e-IPOs, along with the establishment and expansion of the Corporate Solutions Unit (CSU), transformed investor experience, market accessibility and CDS’ role as a comprehensive service provider?
A: These initiatives have modernised Sri Lanka’s capital market by improving convenience, transparency and accessibility.
E-dividends enable direct credit of payments to investors’ bank accounts, offering faster, more secure and cost-effective processing than physical cheques. Similarly, e-IPOs have streamlined subscriptions by eliminating paperwork and enabling wider, nationwide participation – making capital raising more inclusive, particularly for younger, digital first investors.
The establishment of the CSU in 2017 addressed a key market gap: fragmented, manual and non-standardised corporate action and registrar services. The CSU was specifically designed to address this by professionalising and centralising these services – ensuring higher reliability, improved accuracy and better service quality across issuers.
This position was enhanced by the 2024 acquisition of the corporate registrar arm of PW Corporate Secretarial, which expanded Central Depository Systems’ capabilities in registrar services, corporate actions, e-IPO processing and digital AGM support.
These developments strengthened CDS’ capacity to manage larger volumes of issuer related functions, aligned its operations with international best practices and offer an integrated, technology driven suite of services.
Overall, CDS has evolved beyond a traditional depository into a comprehensive corporate services powerhouse, supporting companies throughout their life cycle – from listing and shareholder management to ongoing compliance and capital market engagement.
As a key partner within the CSE, it enhances investor experience, expands market access and supports issuers across the full capital market ecosystem.
Q; As Central Depository Systems approaches its 35th anniversary, what key achievements define its progress? And how will the institution continue to innovate to meet the evolving expectations of the next generation of investors and market participants?
A: As CDS marks 35 years, several milestones stand out in its evolution into a critical market infrastructure institution.
The institution has maintained an uninterrupted settlement record since 1991, a testament to its operational resilience and reliability. Over the years, it has strengthened its technical backbone with world-class systems, continuous innovation and robust risk management practices, positioning it as a key infrastructure enabler for the Sri Lankan capital market.
The 2011 full dematerialisation drive resulted in CDS holding 97 percent of listed equity and 100 percent of corporate debt in scripless electronic form. This near universal digital transition greatly improved security, reduced fraud risk and modernised the investor experience.
Central Depository Systems has also expanded beyond depository functions. Initiatives such as e-dividends, e-statements, e-nominations, e-services, virtual AGMs and e-IPOs improved speed, transparency and nationwide accessibility. The establishment of the CSU and the addition of corporate registry capabilities further integrated CDS into the capital market value chain.
Surpassing one million investor accounts reflects the growth of retail participation driven by digital onboarding and platform evolution.
Going forward, CDS is advancing digital transformation through AI, robotic process automation and end-to-end workflows to enhance efficiency, speed and accuracy. It is expanding issuer focussed services, upgrading investor platforms and improving real-time data access.
CDS is also diversifying beyond capital markets, leveraging expertise in secure custody and data management to serve broader industries.
These initiatives position Central Depository Systems as a forward-looking, technologically sophisticated institution – enhancing market efficiency, transparency and accessibility while shaping the future of Sri Lanka’s capital market.
– Compiled by Prashanthi Cooray
INTERVIEWEE DETAILS
Nadeera Athukorale
Head of Central Depository Systems
COMPANY CONTACT DETAILS
Telephone: 2356444
Email: cdsinfo@cse.lk
Website: www.cds.lk
