Quick answer: to invest on the Colombo Stock Exchange (CSE) you need a licensed stockbroker and a CDS account. Both can be opened in the CSE Mobile App with your NIC and a bank passbook page, usually within 24 hours. There is no minimum investment: you can buy a single share. Each trade up to LKR 100 million costs 1.12% of its value, so a buy followed by a sell costs about 2.24%, and a share has to rise roughly 2.3% before you break even. Capital gains on listed shares are tax-free, while dividends carry a 15% final withholding tax. In 2026 the market has fallen: on 15 October the ASPI closed at 19,971, down 11.7% for the year after a 41.9% gain in 2025.
LKCS1610Below: what the CSE is and how its indices have moved, the full fee breakdown, taxes, how to open an account, the protections and risks, and when a unit trust is the better choice.
The CSE in numbers
The CSE is Sri Lanka's only stock exchange and is regulated by the Securities and Exchange Commission of Sri Lanka (SEC). It runs two main indices. The All Share Price Index (ASPI) covers every listed company. The S&P Sri Lanka 20 (S&P SL20) tracks the 20 largest and most liquid stocks.
| Indicator | End 2024 | End 2025 | Latest 2026 |
|---|---|---|---|
| ASPI | 15,945 | 22,624 (+41.9%) | 19,971 on 15 Oct (−11.7% YTD) |
| S&P SL20 | 4,862 | 6,157 (+26.6%) | 5,699 on 15 Oct (−7.4% YTD) |
| Market capitalisation | LKR 5,695 bn | LKR 8,069 bn | LKR 7,355 bn on 9 Oct |
| Average daily turnover | LKR 2.24 bn | LKR 5.18 bn | Single days in October about LKR 1–2 bn |
| Listed companies | 284 | 288 | 290 at 31 Aug |
The ASPI reached its all-time high of 23,659.70 on 12 November 2025. On 14 October 2026 it fell below 20,000 for the first time since August 2025, to a 2026 low of 19,796. Market reports point to net foreign selling and profit-taking after a rally of more than 100% over two years, but a single cause is never certain. The lesson for a new investor is simple: the strong 2025 return was not a guarantee, and prices can fall for a year or longer.
Interest in the market grew quickly. In 2025 investors opened 57,456 new CDS accounts, three times as many as in 2024, and the total passed one million, ending the year at 1,006,499.
What a trade really costs
For trades up to LKR 100 million, every buy and every sell carries a consolidated fee of 1.12% of the trade value, split between five parties:
| Component | Up to LKR 100 m | Portion above LKR 100 m |
|---|---|---|
| Brokerage (stockbroker) | 0.640% | 0.200% minimum |
| CSE fee | 0.084% | 0.0525% |
| CDS fee | 0.024% | 0.015% |
| SEC cess | 0.072% | 0.045% |
| Share transaction levy (government) | 0.300% | 0.300% |
| Total per trade | 1.120% | 0.6125% |
For trades of LKR 1 billion and above, brokerage is fully negotiable under an SEC directive effective from 31 March 2024. For retail investors, the 0.64% brokerage is a statutory floor, so the 1.12% applies to almost every order.
A worked example shows why this matters. You buy shares worth LKR 100,000 and pay LKR 1,120 in fees, so your cost is LKR 101,120. To get that back after the 1.12% selling fee, you must sell for about LKR 102,265. The share has to rise by about 2.27% before you make anything at all. If you trade in and out ten times a year, fees alone consume more than 20% of your capital. On the CSE, patient long-term holding works far better than frequent trading.
The fee structure for larger trades changed on 31 March 2024 under an SEC directive. Brokerage for orders of LKR 1 billion and above is now fully negotiable, though retail orders still sit at the 0.640% floor under transaction structuring rules. As of October 2026, the reduced total marginal rate above LKR 100 million is 0.6125%.
Account opening has shifted almost entirely digital. As of October 2026, more than 90% of new CDS accounts come through the CSE Mobile App, with activation typically within 24 hours. The one-million account mark was passed during 2025, ending the year at 1,006,499 accounts, with 57,456 opened during 2025 alone. If you are weighing listed shares against pooled products, a unit trust may suit investors who prefer manager-led diversification.
Taxes on shares
- Capital gains: gains on shares listed on the CSE are exempt under paragraph (h) of the Third Schedule to the Inland Revenue Act No. 24 of 2017, whatever the size of the gain or the holding period. Gains on unlisted shares and property are taxed: the Inland Revenue (Amendment) Act No. 11 of 2026 raised the rate for individuals from 10% to 15% from 3 June 2026.
- Dividends: companies deduct a 15% withholding tax, and it is a final tax. The dividend is not added to your assessable income, and the Inland Revenue Department's guide for the 2025/2026 year of assessment states that no further tax is payable on it.
- Compare with deposits: withholding tax on bank interest rose from 5% to 10% from 1 April 2025. For an investor comparing options, the after-tax difference between shares and fixed deposits is therefore smaller than the headline rates suggest, but shares carry price risk that a deposit does not.
How to open a CDS account
- Download the official CSE Mobile App and choose to open a CDS account; verify your email and mobile number with one-time codes.
- Choose a licensed stockbroker from the list in the app. Brokers differ in research, platform and service, not in the minimum fee.
- Fill in your personal, address, employment and bank details, and the politically exposed persons declaration.
- Upload both sides of your NIC and a bank passbook page or statement showing your account number, plus a utility bill from the last three months if you live at a different address from the one on your NIC. Resident applicants must use the NIC: it is checked against the Department for Registration of Persons, so a passport or driving licence is not accepted online.
- Take the live selfie for e-KYC and accept the online agreement.
Accounts are usually activated within 24 hours, and CDS emails your account number. You must be at least 18 to open your own account; accounts for minors are opened through a broker with a parent or guardian. Joint accounts are possible. Foreign investors and non-resident Sri Lankans open a foreign individual account and must route money through an Inward Investment Account at a licensed bank in Sri Lanka, as required by Central Bank directions. Sale proceeds and dividends return to that account and can be repatriated freely.
Protection and risks
- Settlement: trades settle two market days after execution (T+2). Since 28 July 2025, CSE Clear has acted as central counterparty, so if the other side of your trade defaults, settlement is still guaranteed.
- Circuit breakers: if the S&P SL20 falls 5% during the day, trading stops for 30 minutes; at a further 2.5% drop there is a second 30-minute halt; at 10% the market closes for the rest of the day.
- Broker failure: your shares are held in your own name at the CDS, not by the broker. The SEC also runs a Compensation Fund under the SEC Act No. 19 of 2021 for investors who lose money because a licensed broker cannot meet its obligations.
- Margin trading: buying on borrowed money is only allowed through an SEC-licensed margin provider with a written agreement. It multiplies losses as well as gains; in a falling year like 2026 it is the fastest way to lose capital.
- Tip groups: the SEC has warned about stock tips and target prices spread in WhatsApp and Telegram groups and monitors them for manipulation. Take advice only from SEC-licensed investment advisers, and never move money to anyone outside your own broker and CDS account.
Shares or a unit trust?
If you do not want to pick individual companies, a unit trust lets a licensed manager do it for you. By November 2025 the industry managed LKR 597 billion across 85 funds from 16 management companies, with about 141,000 unit holders. Since an SEC directive that took full effect in April 2026, every fund must fit one of seven categories, such as growth funds with at least 80% in equities, balanced funds, money market funds and index funds, so it is easier to see what you are buying. You pay a management fee instead of the 1.12% per trade. Our guide to unit trust funds in Sri Lanka compares the categories, and for money you may need within a year, treasury bills carry no share price risk.
If you plan to trade, check the fee tier that applies to your order size before you place it. For standard retail trades, the 1.12% per-side cost remains unchanged as of October 2026, but orders at or above LKR 1 billion can be negotiated below the standard brokerage floor. Verify this with your broker before agreeing to a large transaction. Also note that more than 90% of new CDS accounts are now opened digitally, so the old paperwork route is largely gone. Confirm your account activation timeline and the exact fee schedule in writing, because the difference between the standard and reduced tiers directly affects your break-even point on larger trades.