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How To Open An Account In Colombo Stock Exchange. A Step-by-Step Guide

How to open an account in Colombo Stock Exchange. A Step-by-Step Guide

This post is the 3rd in a series of posts on investing in Sri Lankan stock market.

This is a simple guide on opening an account to invest in Colombo Stock Exchange. If you have no idea about investing in Sri Lankan stock market or Colombo Stock Exchange, I suggest you read our previous posts on How to make money in Sri Lankan stock market and Basics of Sri Lankan share market. Once you finish reading them, you can come here. Don’t worry. I won’t leave you!

This post is all about registering yourself in the Colombo Stock Exchange. In case you didn’t know, you need an account with CDS (Central Depository System) to invest in Colombo Stock Exchange. We will cover everything you need to know about opening an account in this post.

Usually, to open an account, you will have to go to a stock broker firm. Then they will welcome you with an ear-to-ear grin and will provide you lot of forms to fill. They will also get some documents from you and in no time, you will have an account.

So basically to open an account, all you have to do is find a stock broker firm and meet them. But to make things easier for you, I will tell you exactly what you need to know to become an investor.

Must have requirements

Age – You need to be 18 years old to start investing in Colombo Stock Exchange. That is a must. So if you are below that, you have no option but to wait till you’re 18!

Resident in Sri Lanka – You have to be a resident in Sri Lanka. For non-residents, read further.

Forms, forms, and more forms

Like in every account, there are some forms that you need to submit to become an investor. Following are those forms and a small introduction of what they are. All these forms will be given to you by your stock broker. So don’t worry too much about them.

  1. NIC copy – You need to provide a clear photocopy of your NIC or a valid passport copy. If you have lost both NIC and passport (you must be a really clumsy person) a copy of the Driving License should be submitted, together with an Affidavit (a written statement confirmed by oath or affirmation, for use as evidence in court) confirming the fact that both NIC and Passport are not available.
  2. CDS Form 1 – This is the application for Opening of Securities Account (For Individuals)
  3. CDS Form 1(A) – Declaration Form
  4. CDS Form 26 – If you want to get monthly electronic statements of your account, you need to submit this.
  5. KYC (Know Your Customer) Form – This form is given by your stock broker to collect some more information about you. This is different from one broker to another.
  6. Internet Trading Facility Agreement – If you’re planning to trade online (more on this in a future post) you need to submit this form. Again, this is different from one broker to another.
  7. Proof of residency document – Some kind of a bill (any utility bill would do) to prove your resident address needs to be provided

Once you submit these document to your stock broker, they will send them to CDS (Central Depository System). You will get a mail via post when your account is opened.

What if you’re not a resident in Sri Lanka?

So what if you’re a Non-residential Foreigner or a Non-residential Sri Lankan? Can you still invest in Colombo Stock Exchange? Hell yes! Following are the documents you need to provide to your broker.

Non-residential Foreigner

If you’re a foreigner who is interested to invest in Sri Lanka share market, you need to provide following documents.

  1. A copy of the valid Foreign Passport for Nonnationals
  2. CDS Form 1 – This is the application for Opening of Securities Account (For Individuals)
  3. CDS Form 1(A) – Declaration Form
  4. Proof of residency document as per the Rules issued by the Financial Intelligence Unit of Sri Lanka
  5. If a Non-national applicant wishes to open an account giving a local correspondence address that person should provide sufficient information regarding the correspondence address (e.g. valid residential visa)
  6. SIA (Securities Investment Account) account details with documentary proof – SIA is a special account designated for eligible investors resident outside Sri Lanka to route funds to invest in the permitted investments. Authorized dealers are permitted to open and maintain SIA in the Domestic Banking Unit of a licensed commercial bank in the name of the investor resident outside Sri Lanka, subject to the terms and conditions stipulated in the Direction given below

Non-residential Sri Lankan

If you’re a Sri Lankan who is a non-resident, you need to submit following documents.

  1. A copy of the valid Foreign Passport for Nonnationals
  2. CDS Form 1 – This is the application for Opening of Securities Account (For Individuals)
  3. CDS Form 1(A) – Declaration Form
  4. Proof of residency document as per the Rules issued by the Financial Intelligence Unit of Sri Lanka
  5. If a Non-national applicant wishes to open an account giving a local correspondence address that person should provide sufficient information regarding the correspondence address (e.g. valid residential visa)
  6. SIA (Securities Investment Account) account details with documentary proof – SIA is a special account designated for eligible investors resident outside Sri Lanka to route funds to invest in the permitted investments. Authorized dealers are permitted to open and maintain SIA in the Domestic Banking Unit of a licensed commercial bank in the name of the investor resident outside Sri Lanka, subject to the terms and conditions stipulated in the Direction given below

If it looks complicated, trust me, it’s really not. It’s similar to opening bank account and can be done in a jiffy.  To sum things up, all you need to do is find a stockbroking firm and they will assist you with all the documentation. You don’t have to take any forms with you. Your stock broker will provide all the forms you need. In no time, you will have your own account to invest in Colombo Stock Exchange.

Read the next post on How to select a stockbroker in Sri Lanka. If you want to get the future posts about investing in the Sri Lankan stock market, submit your email address in the box below.

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Nishan De Silva

Nishan is the founder of Jump.lk. He is a life enthusiast who loves reading and eating. His ambition is to travel 100 countries before dying (even though he hasn't been out of the country yet!)

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