Sri Lanka has moved from a rural economy to an urban business center. Participate in its growth and invest in the Sri Lankan stock market.
Start now with an overview of the best stockbrokers in Sri Lanka.
Best Stock Brokers in Sri Lanka:
What you need to know about investing in the Sri Lankan stock market
Sri Lanka intends to continue to attract foreign investment by improving its infrastructure and strengthening its democracy with the support of the World Bank. Sri Lanka’s main stock market is the Colombo Stock Exchange (CSE) located in the national capital of Colombo.
All foreign institutional and individual investors must open a Securities Investment Account (SIA) with a Sri Lankan custodian bank. You must also open an account with the Sri Lanka Central Depository System (CDS) and submit a Know Your Customer (KYC) form with your depositary bank. You must also provide the usual personal identification documents such as your passport or other form of government-issued identification.
This process usually takes 2 weeks for institutions or 2-3 days for individuals upon submission of all required documents. The most common custodian banks used by foreign investors and traders to open SIA accounts in Sri Lanka include Citibank, German Bank, HSBC and Standard Chartered Bank.
Sri Lanka does not impose capital gains tax on securities traded on the CSE, but a 10% withholding tax is levied on dividends. Securities brokers, investment advisers and the stock exchange in Sri Lanka are supervised by the Securities and Exchange Commission of Sri Lanka (SECOND).
The CSE consists of a fully automated exchange directly linked to the CDS. The exchange is open Monday to Friday from 9:30 a.m. to 2:30 p.m. with a pre-market opening at 9:00 a.m. The CSE system is completely dematerialized, which means that all stock and share certificates are stored electronically in your SIA.
Once you have opened the appropriate SIA account, you can select a broker to execute your trades on the CSE. Not all brokerages are created equal, so be sure to consider your needs carefully before opening an account.
What to consider before investing
Online brokers make investing simple, but you still need to think carefully before jumping in. Before jumping into the Sri Lankan stock market, you should:
- Develop a plan or strategy. If you haven’t made a plan, you can research the market yourself or rely on a professional broker based in Sri Lanka who will usually have their own research department.
- Test your plan. Once you have developed or acquired your own investment or trading plan, you should test it manually or in a virtual trading account, if possible. Some brokers offer these accounts for you to demo their software and trading platform which can also be used to test your plan.
- Select your stock or bond. Your investment plan should include funds from various sectors or industries; your trading plan is to select a trading strategy that takes stock performance into account. Deciding which securities to invest or trade in requires substantial market research and analysis.
- Take exchange rate risks into account. When investing in stocks and other instruments overseas, always consider currency risk. Investing in assets that are not denominated in the currency of your place of residence means that you will have to convert the foreign currency coming from your investments into your local currency. The Sri Lankan Rupee (LKR) is the national currency of Sri Lanka and currently trades at around 181.50 rupees per US dollar.
Best Stock Brokers in Sri Lanka
Take a look at the brokers who made our list!
Global and Active Traders
Broker 1: Interactive brokers
Interactive Brokers is perfect for sserious traders with advanced knowledge. With both inactivity fees and a complex pricing system, IB should only be used by investors who trade frequently.
Interactive Brokers allows investors to trade from Apple or Android devices. The mobile platform offers excellent quality, multiple news feeds, accounts, watchlists, trading options, notifications and more.
If you are serious about the trades you make, Interactive Brokers is everything you are looking for in a broker. Its low margin rates, low commission on high volume trades, high interest paid on idle cash in your trading account and its elite tools and platform provide a unique experience for the right type of investor.
Broker 2: IG
Novice traders will love IG’s intuitive mobile and desktop platforms, while advanced traders will revel in the platform’s selection of indicators and charting tools. While IG can work on its customer service and fees, the broker is a boon for new traders with its streamlined interface.
IG’s mobile app continues its commitment to simplicity. It offers comprehensive trading capabilities in a streamlined and powerful platform.
Creating an account with IG is quick and easy, even for those who have never opened a brokerage account before. You can complete the entire process online, and IG’s intuitive registration system will help you upload identity verification documents and link your bank details to fund your account.
IG offers a comprehensive selection of live webinars to supplement your learning. Webinars are available at all skill levels and are free to all account holders. Some upcoming webinar topics include a Trading Masterclass on how to use the IG platform more effectively and MACD trading strategies, an introduction to the MACD indicator and how to use it.
Broker 3: first capital
This broker is best suited for investors focused on bond and bond trading. First Capital offers institutional investors and individual asset managers tailor-made wealth management solutions.
First Capital offers in-depth research with a daily market watch, economic and fixed income research report, strategy reports and company stock research. The company also provides actionable trading recommendations through its periodic market commentary reports and other publications.
First Capital’s online platform is from ATrad and includes a mobile app available for Android and iOS devices. Commissions related to CSE, CDS, SEC and government tax are consistent with those of other brokers in Sri Lanka.
Broker 4: John Keells Stock Brokers
John Keells Stock Brokers is one of the leading brokerage houses in Sri Lanka. The firm has decades of experience in the region and has handled some of the largest and most important transactions in CSE history.
John Keells has an excellent research center which includes premium research, routine research and a research library. The company’s research unit also offers country, sector and company specific data and other value-added services.
Additionally, you can access online trading powered by DUInvest. Download its trading software using a desktop Trader WorkStation (TWS). You can find the mobile app on Android or iOS.
Commissions due to CSE, CDS, SEC and government tax are the same as other brokers in Sri Lanka, while the broker’s trading commissions for less than LKR 100 million is 0.64% and 0.2% for more than LKR 100 million.
Broker 5: Sharpness
Acuity partners is a full-service investment bank operated as a joint venture between DFCC Bank and HNB. The broker’s subsidiaries include Acuity Corporate Finance, Acuity Securities Ltd., Acuity Stockbrokers Ltd., Lanka Ventures PLC and Guardian Acuity Asset Management Ltd.
The broker offers asset management, corporate finance, fixed income and equity brokerage services for the CSE. Additionally, Acuity offers a number of mutual funds with relatively high yields. Guardian Acuity funds include an equity fund, a money market fund and a Gilt money market fund.
Although you cannot trade online with Acuity, this broker is ideal for investors looking for long-term, fixed income and unit trust investments. Acuity also provides its clients with high quality capital markets research and analysis. Commissions due to CSE, CDS, SEC and government tax remain consistent with other brokers in Sri Lanka.
Sri Lanka presents an attractive investment opportunity. As a developing economy, investing in Sri Lanka tends to involve additional long to medium term risks and rewards. The short-term gains have been muted somewhat since investment interest in the island nation has recently waned.
Geopolitical concerns have affected Sri Lanka, and investing in its stock market may not be for everyone. Consider the dynamics of the area and do your research before taking the associated risks. Connect with a trusted broker to learn more about investing in the Sri Lankan stock market today.
Frequently Asked Questions
What are the good brokers in Sri Lanka?
What are the good brokers in Sri Lanka?
Sri Lanka offers several brokerage options including Interactive Brokers, First Capital and John Keells Stock Brokers.
How can I buy shares in Sri Lanka?
How can I buy shares in Sri Lanka?
You can buy ADRs, mutual funds, ETFs and through a broker with access.