Why You Need an Approved Stock Broker to Invest in the Colombo Stock Market: A Comprehensive Guide
For new investors eyeing the Colombo Stock Exchange (CSE), understanding the role of a licensed stockbroker is crucial. Unlike direct market access in some jurisdictions, Sri Lanka’s regulatory framework mandates that all retail investors trade through approved brokers. This requirement safeguards investors, ensures market integrity, and facilitates efficient transactions. Below, we break down why this rule exists, how brokers add value, and what to do if trust is breached. 1. Why Is an Approved Stock Broker Required? a. Regulatory Compliance & Investor Protection The Securities and Exchange Commission of Sri Lanka (SEC) requires all investors to trade through licensed brokers to: Prevent fraud and unauthorized trading : Brokers act as intermediaries, verifying investor identities and ensuring transactions comply with laws like the Securities and Exchange Act of 1987 . Maintain market order : Brokers are bound by SEC r...