The CSE operates 3 main systems.

 

The Central Depository System
Automatic Trading System
Debt Securities Trading System

 

The CSE commenced the process of automating the Exchange in 1991 with the installation of the Central Depository System (CDS) and an electronic clearing and settlement system for share transactions. This automation process was completed with the commissioning of the Automated Trading Systems (ATS) in 1997. The technology introduced by the Exchange significantly enhanced the competitiveness of the CSE and provided a more efficient and transparent market.

 

Automated Trading System of the Colombo Stock Exchange

 

The Colombo Stock Exchange operates a fully fault tolerant distributed architecture Trading System with event driven push technology which provides a robust platform for trading. The system consists of a collective group of programs working cohesively in a distributed environment that delivers the business functionality, which is easily maintainable. The order driven trading platform assures a transparent market and executes trades on price and time priority.

 

The Local Area Network has built in redundancy with dual network backbones, firewalls and Intruder Detection and Prevention systems for security adds to the robustness of the system. The wide area network also has dual links to broker firms through two independent communication service providers to ensure maximum uptime.

 

The Trading System commences trading with a pre-open session followed by an auction process for price discovery and proceeds to regular trading. The market is closed with the calculation of average closing price for each security taking into consideration the last one hour’s trading from the last trade.

 

The Exchange provides 2 mechanisms to process an order of an investor namely the ATS Front End (TFE) that has been provided by the Exchange to Broker Firms to input orders and the ATS Interface (ATSI) which interface third party order routing systems to the Trading System. Broker back office systems and broker internet order processing applications are interfaced to the trading system through the ATSI gateway.

 

The ATS Market Watch Front End (MWFE) provides the same facility as the TFE without the order entry function. The MWFE is provided to the Broker Firms and other market participants to monitor the market movement. An enhancement to the above is a Front End with automatic scrolling capability. This consists of two separate windows.

 

One window displays all trade executions whilst the other window displays security details. The screens scroll automatically and are updated dynamically. This facility is available at the Exchange and Broker Firms for investors to view trade executions and security statistics.

 

ATS Front End.

 

The TFE is a comprehensive tool to enter orders while monitoring the market. The sophisticated front end has three screens where the user has the ability to configure and select the securities that the user intends to monitor. Flexibility of moving the columns to convenient locations are also a key feature that is available on each of the windows.

 

Orders are entered primarily through the TFE and on execution of each order, trades are reported to the frond end. The confirmation of trades reported back to the user window is also real time printable. This would enable the user to confirm trades as soon as the execution takes place.

 

All orders are visible to the trader through the Blotter window which provides detailed information of executions and also displays partial executions. Orders can be active up to 5 market days and can be cancelled or modified during trading hours.

 

The order book indicates the current quantities and the prices in the market and displays all price levels.

 

The market watch window can be configured by the user to monitor only selected securities depending on the requirement of the user.

 

The Trading System ensures that the selling client has sufficient balances by validating the order quantity with the Central Depository System (CDS). The user is provided with a window to verify client balances from the order entry screen. This facility is online real time and provides the broker the ability of selling the shares no sooner it is deposited in the Depository.

 

ATS Interface

 

The ATS interface ensures the validity of the incoming orders from broker systems and uses the Financial Information eXchange (FIX) Protocol to communicate with any third party software. The interface provides the mechanism for brokers to interface their internet order processing module and their broker back office systems to the Trading System.

 

Serial Data Feed

 

The data vendors obtain market updates from two serial data feeds that are available in the system

 

DEX Trading System of the Colombo Stock Exchange

 

The CSE introduced a state of the art DEX system in 2004 for the trading in corporate debt securities and in the beneficial interest of government Treasury Bills and Bonds which came into effect from 1st August 2005. The legal ownership of government securities purchased on behalf of investors would remain with CDS in the Central Bank’s depository.

 

The system consists of a collective group of modules working cohesively in a distributed environment that delivers the business functionality, which is easily maintainable. The order driven trading platform provides a transparent market and matches orders on price and time priority.

 

The Local Area Network has built in redundancy with dual network backbones, firewalls and Intruder Detection and Prevention Systems for security adds to the robustness of the system.

 

The DEX Trading System commences trading with a pre-open session followed by an auction process for price discovery and proceeds to regular trading. The Exchange provides DEX Trader Front End to Broker / Dealer firms, to submit orders to the DEX system.

 

The DEX – Trader Front End (DEX-TFE) is a comprehensive tool to enter orders while monitoring the debt market. The sophisticated front end has three screens where the user has the ability to configure and select the securities that the user intends to monitor. Flexibility of moving the columns to convenient locations are also a key feature that is available in each of the windows.

 

Orders are entered primarily through the DEX-TFE and on execution of each order, trades are reported to the frond end. This would enable the user to confirm trades as soon as the execution takes place.

 

All orders are visible to the trader through the Blotter window which provides detailed information of executions and also displays partial executions. All Orders will expire at the close of the market as price changes with respect to the order yield, for fixed settlement orders. The order book displays the current quantities and the Price / Yield in the market and displays top five bids and asks.

 

The Market Watch window can be configured by the user to monitor only selected securities depending on the requirement of the user.

 

The DEX Trading System ensures that the selling client has sufficient balances by validating the order quantity with the Central Depository System (CDS). The DEX system is capable of handling Sell & Buy Back (SBB) transactions as well as out right buy / sell transactions. Further more, the DEX system will check Exposure / Collateral level of the dealing broker / dealer, in order to maintain the broker exposure when submitting an order. The system adheres to a Delivery vs Payment (DVP) settlement system which guarantees the delivery of securities on payment.