London looks to Lanka!

The London Stock Exchange (LSE) is optimistic on Sri Lanka given the strong post-war upside for the economy and capital markets and is urging the country and companies to harness the global giant’s strengths and reach to grow better.

“Following the end of the conflict, Sri Lanka has evolved with an attractive and strong growth story, which many countries and international companies have taken notice of,” LSE’s Group CEO Xavier Rolet told the Daily FT yesterday in an exclusive interview. “I think the time is right for Lankan entities to tap the vast international pool of capital,” he added.
Rolet opined that post-war Sri Lanka promises high growth scenario in sectors such as infrastructure, transportation, construction, real estate, tourism, manufacturing, services and funding needs for companies engaged in these areas can explore prospects in global markets.
“Accessing funds competitively and conveniently will help turbo-charge growth in these sectors,” he said, adding, “Sri Lanka has a great tradition of entrepreneurship and entrepreneurialism both at family and corporate level.”

LSE is the most international of all the world’s stock exchanges and has a choice of markets providing with one of the world’s deepest pools of investment capital. Europe’s leading diversified exchange business, LSE has around 3,000 companies from over 70 countries admitted to trading on its markets.
The improving profile of Sri Lanka is another reason why LSE believes that if the Colombo Stock Exchange (CSE) and the Securities and Exchange Commission are willing, a greater collaborative effort can be made to woo international investors.
Last year initial interest for a working relationship was expressed by the LSE including the possibility of setting up an International Board in partnership with cross listings, but Rolet – who is in Colombo to attend the LSE’s Board meeting today – declined to comment on the progress. Following high level visits by its leaders, the Qatar Government, which owns a 15% stake in LSE, has also expressed to explore options in opportunities in capital market development.
When the idea of an international board or closer collaboration between LSE and CSE was first mooted, most analysts viewed it as a major development which will help draw in a new base of foreign investors as well as boost liquidity levels of Sri Lankan stocks. Apart from LSE’s impressive stature and scale, the time differences between London and Colombo provide continuous trading opportunities.
“We are keen to cooperate and collaborate and not compete with Colombo,” the LSE CEO assured.
The business case articulated by LSE is credible whilst a testimony of its trust and confidence in post-war Sri Lanka was two years ago acquiring the world renowned technology firm/trading platform solutions provider MillenniumIT.
Following the acquisition, MIT is LSE’s global solutions provider with MIT co-founder and CEO Tony Weerasinghe functioning as LSE’s Head of Global Developments and Global Exchange Relations Services.
MIT solutions currently power exchanges, depositories, brokerages and regulatory bodies in the United States, Europe, Africa and the Asia-Pacific region.
LSE recently tied up with the stock exchange of Mongolia to help the country, which is experiencing over 20% growth in its GDP, to develop its domestic capital market as well as attract more foreign investors.
The acquisition of MIT has also helped LSE to scale up its own trading platforms in addition to eyeing for new projects and upgrades among global exchanges. A recent upgrade was with Chittagong Stock Exchange in Bangladesh whilst a deal with Delhi Stock Exchange was also signed. MIT also provided trading surveillance system for the Egypt stock exchange.
Rolet pointed out that there had been great synergies between LSE and MIT, apart from the acquisition making strong progress. MIT has got greater exposure to expertise on clearing and settlement aspects of capital markets as well.
Soon after acquiring MIT, Rolet said: “Improving our technology and increasing our competitive position in the fast-moving trading environment is vital.  This transaction enables the Group to implement a new, more agile, innovative and efficient IT capability for our future business development as well as running a new cash trading platform which will provide substantially lower latency, significantly higher capacity and improved scalability.” 
“It will also offer cost saving opportunities in the future and give the Group a footprint in Asia.  Moreover, MillenniumIT is a proven business, already serving multiple clients in multiple geographies, including some of the best known in their fields.  The potential from this transaction is considerable for both parties,” the LSE CEO emphasised then.
Considerable progress has been confirmed by its expansion in Sri Lanka via MIT.
The LSE Group operates a broad range of international equity, bond and derivatives markets, including the London Stock Exchange; Borsa Italiana; MTS, Europe’s leading fixed income market; and Turquoise, offering pan-European and US lit and dark equity trading. Through its markets, the Group offers international business unrivalled access to Europe’s capital markets. Last month LSE acquired the balance 50% stake in FTSE International Limited (FTSE) a world-leader in the provision of global index and analytical solutions.
An industry report published in May last year showed that the LSE offers trading in more emerging markets Exchange Traded Funds (ETFs) than any other exchange in the world.