The Colombo Stock Exchange (CSE) has gone live with the launch of a central counterparty (CCP) in Sri Lanka.
Marking a milestone for the region, the CCP framework aims to significantly enhance the safety, efficiency, and global competitiveness of the domestic capital market.
Further, the use of a CCP aims to strengthen market stability, reduce systemic risk, and align with international best practices, according to the exchange.
To commemorate this achievement, the CSE says a special market opening ceremony was held on 1 August 2025 at the CSE trading floor.
CSE Clear, a fully owned subsidiary of the CSE and a licensed clearing house, will act as the CCP for all equity transactions executed in the CSE.
Dulani Warnakulasooriya, senior vice president of enterprise risk management and post-trade settlement at the CSE, says: 鈥淐CPs promote global standards for trade clearing, margining, and risk management.
鈥淭his harmonisation is essential for cross-border trading and attracting international investors. In fact, many international investors and custodians require CCP clearing for market access.鈥�
CSE Clear employs a margin methodology that includes base margin requirements and daily margin requirements, ensuring that clearing members maintain sufficient collateral to cover any potential losses.
In addition, the CCP will maintain a guarantee fund as a financial safeguard to cover shortfalls in the event of a clearing member's default. This fund consists of contributions from both CSE Clear and the clearing members.
CSE Clear will introduce different membership categories 鈥� self-clearing members which clear and settle their own transactions; and professional clearing members which settle their own transactions and those of other trading participants or custodian banks.
Warnakulasooriya adds: 鈥淲ith a CCP in place, a market becomes more resilient, trustworthy, and globally competitive. It serves as a foundation for deeper market development enabling higher volumes, more sophisticated instruments, and broader investor participation.
鈥淭his will support the CSE in introducing new products to the market, such as derivatives and other complex instruments. Furthermore, the robust risk management framework of a CCP provides investors with the confidence to engage in more advanced trading strategies, such as short selling.鈥�
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