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How to select a stockbroker in Sri Lanka (UPDATED 2020)

Are you looking for a stockbroker in Sri Lanka to invest in the Colombo Stock Exchange? Then you’ve come to the right place.

By the end of this post, you will exactly know how to select a stockbroker in Sri Lanka (Read till the end to get the Cheat Sheet.)

 

Who are stockbrokers?

Stockbroker firms act as the middleman between investors and the Colombo Stock Exchange.

There are currently 26 stockbrokers in Sri Lanka. You can find out who they are by visiting the Colombo Stock Exchange website here.

 

Why do you need a stockbroker to invest in the Colombo Stock Exchange?

When you want to buy or sell shares on the Colombo Stock Exchange, you can’t go directly to CSE and do it. You need the service of a stockbroker.

That’s why these firms are called stock brokers. Because they act as a broker between you and the Colombo Stock Exchange.

To invest in the Colombo Stock Exchange, the first thing you should do is find a stockbroker in Sri Lanka. Then they will open a CDS (Central Depository System) account for you. Once you have a CDS account, you can start buying and selling shares.

How do stockbrokers make money?

If you ever wondered how stockbrokers make money, it’s simple. They make money out of you!

Whether you buy or sell stocks, there’s a transaction fee or 1.12%. Here’s the breakdown of it.

Brokerage Fees 0.640%
CSE Fees 0.084%
CDS Fees 0.024%
SEC Cess 0.072%
Share Transaction Levy 0.300%
Total transaction cost 1.120%

Your stockbroker firm gets 0.64%. The rest of it goes to respective organizations that contribute to your transaction (Colombo Stock Exchange, Central Depository System, Security Exchange Commission, etc.)

For example, if you buy or sell Rs.1, 000 worth of stocks, you’re paying Rs.11.2 as transaction fees (1000×1.12%)

 

Who is the best stock broker in Sri Lanka?

This is the #1 question that I get asked by potential investors. They want to know the best stock broker in Sri Lanka.

Here’s the thing.

No matter which stockbroker you choose, you’ll pay the same transaction fee of 1.12%. This fee doesn’t change.

Then what difference does it make to select a stockbroker in Sri Lanka?

What to consider when selecting a stockbroker in Sri Lanka?

There are 5 things to consider when selecting a stockbroker in Sri Lanka.

 

#1 Minimum investment to open a CDS account

Most stockbrokers let you open a CDS account without a minimum investment. But some stockbrokers want you to invest a minimum amount. This ranges from Rs.50, 000 to Rs.1 million.

This is completely up to you. It’s just a matter of how much you want to invest in the beginning.

 

#2 Minimum investment to Online Trading Access

There are 2 ways you can buy and sell shares once you open a CDS account with a stockbroker.

  • Stock advisor – When you register with a stockbroker, they are going to assign a stock advisor. When you want to buy or sell shares you can ask them to do it for you.
  • Online Trading – The other way you can buy and sell stocks is by using an online trading platform. Almost all stockbrokers in Sri Lanka have online trading and you can do it on your own. This is what I prefer. I don’t even know the name of my stock advisor!

Here’s the catch.

While some provide an online trading facility when you open a CDS account, others require a minimum investment.

If you don’t have the minimum investment, you’ll have to trade via your stock advisor. That’s the only difference.

 

#3 Online Trading Platform

Different stockbrokers use different trading platforms. This is a website and you get a username and a password to log in and trade. The most popular trading platform is ATrad.

But keep in mind that any trading platform will have more or less the same features.

 

#4 Research Reports

Most stockbroker firms in Sri Lanka have their internal research teams. These professionals analyze different stocks and most of them come with recommendations. If you’re a beginner, it’s a good idea to read some of these reports to get an idea.

While some firms share these reports, some don’t. This is another thing you need to consider before selecting a stockbroker.

 

#5 Mobile Trading Facility

Most firms now offer to trade using a mobile app. This is completely up to you. I usually log in from my computer.

If you feel like you’ll trade using a mobile app, consider this.

 

So who is the best stockbroker in Sri Lanka?

There’s no ONE best stockbroker. That’s up to you!

Of course, the way they treat you and the customer service will be different from one to another. But no one can claim they know the best stock broker in Sri Lanka unless they have CDS accounts with all 26 stock brokers in Sri Lanka!

That leads to another question.

 

Can you have CDS accounts with multiple stockbrokers?

Of course! You can have CDS accounts with multiple stock brokers. If your current stockbroker is bad, find another.

 

Time to select a stockbroker in Sri Lanka

Now it’s your call.

By now you’re fully equipped to select a stockbroker on your own. To make your life easier, I have created a Cheat Sheet that compares every stockbroker in Sri Lanka based on the above criteria.

Not only that. I have listed their contact details so you can call them and inquire for yourself. Make sure to ask about the above 5 criteria before opening a CDS account with them.

To access the Cheat Sheet click the link below and add your email address. Once done, you’ll get a link to access it.

Click here to grab the Cheat Sheet.

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Nishan De Silva

Nishan De Silva

Nishan is the founder of Jump.lk. He is a Blogger, YouTuber, Coach, Speaker, and Entrepreneur.

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