Sri Lanka has made strong progress since the post-COVID economic crisis. The economy is stabilising, with lower interest rates, low inflation, a stable currency, and improving credit conditions, all of which have supported the recovery and lifted the stock market. Over the past two years, market returns exceeded 75%, and 2025 began on a strong note, says Vindhya Jayasekera, Chief Executive Designate of the Colombo Stock Exchange (CSE).
Despite global headwinds, domestic conditions continue to improve. Corporate earnings are rising, thanks to lower interest rates and stronger credit demand. Policy direction also supports stability and growth. “In the short term, market direction will depend largely on global events. But that doesn’t mean a downturn is expected. The market rose over 3% even after the latest tariff news,” Jayasekera says. “The key for investors is to stay informed, focus on resilient sectors, and look for quality opportunities, and there is still room for strong returns,” she explained in a recent interview, excerpts of which follow.
What changes or improvements will you introduce to help the CSE grow and stay relevant?
Our planned upgrades at the CSE are aligned with key priorities: boosting liquidity, growing market capitalization, and safeguarding market integrity.
We are developing new products to offer investors more choice. One of these is Exchange Traded Funds (ETFs), which allow people to invest in a group of stocks rather than individual companies. ETFs are straightforward and accessible, making them an ideal choice for new investors. At the same time, we are exploring more advanced instruments, such as derivatives, to broaden investor participation and enhance liquidity.
Together with the SEC, we are also evaluating the introduction of Market Makers and Liquidity Providers. Their role is to ensure continuous buying and selling activity, helping the market function more smoothly, which could reduce price volatility and improve accessibility. We are assessing the requirements and incentives needed to support their participation and make their presence meaningful.
ESG investing remains a key area of focus. We have introduced rules for sustainable bonds and seen encouraging interest from issuers. Going forward, we plan to enhance transparency and disclosure among listed companies and develop ESG indices to support investors in identifying and promoting sustainable businesses.
How do you plan to encourage more companies to list and more people to invest in the capital market?
Educating companies about the benefits of listing remains a top priority. We focus on industry-specific workshops and direct outreach to explain the process and share real success stories from companies that have grown after listing on the Colombo Stock Exchange.
Our message is simple: listing is more than a way to raise capital. It can reshape how a company is perceived. Listed companies are perceived as more transparent, accountable, and better governed, which fosters trust and can also expand access to new markets, broaden customer reach, and provide diversified funding options. For many, it’s a strategic step that drives long-term growth.
Notably, several large, well-established Sri Lankan companies have yet to consider listing on the stock exchange. Many have relied on preferential bank loans. However, with the Central Bank’s directive to reduce single borrower limits from January 2026, these companies may need to explore alternative options. We are already engaging with them to highlight how listing can be a practical and strategic funding solution.
At the same time, we are collaborating with the SEC to streamline the listing process and reduce documentation requirements, making listing more accessible and attractive for growing businesses.
On the investor side, financial literacy remains a core focus. Alongside traditional efforts, we are expanding through social media and our mobile app, offering straightforward, easy-to-understand content on how markets work and how to get started.
We are seeing a rising interest from Millennials and Gen Z, who are more open to capital market opportunities, thanks to digital tools and improved financial awareness. We are working to make their experience fully digital, seamless, and mobile-friendly, from opening an account to trading, so that investors can grow with the market.
What will be your approach to technology and innovation?
Technology and innovation are at the heart of the CSE’s next phase of growth. Our focus is twofold: strengthening the Exchange’s core infrastructure and making investing more accessible for everyone.
We are upgrading key systems, including the Central Depository System (CDS), to ensure faster, more secure, and scalable operations. This will enhance trade settlement, increase reliability, and support higher volumes as participation expands.
We are also introducing a Central Counterparty System (CCP), a significant step forward. The CCP guarantees trade settlements by standing between the buyer and seller, thereby reducing risk and building investor confidence, which aligns the CSE more closely with global best practices and strengthens market integrity.
Beyond infrastructure, we are enhancing the digital investor experience. A mobile app upgrade is underway, and we are developing interactive tools to engage new investors. One such initiative is a stock market simulator game that provides a risk-free way to explore trading strategies and market reactions, making financial education more accessible, especially for younger or first-time investors.
We are also exploring the potential of advanced features, including algorithmic trading, omnibus accounts, and smart order routing. These tools, commonly used in developed markets, could significantly enhance efficiency and the overall trading experience in Sri Lanka.
With many projects underway, we are mindful about sequencing. Each initiative carries both technical and regulatory implications, and we are prioritizing them carefully. But the direction is clear: everything we are doing is aimed at boosting market liquidity and expanding investor participation.