New SEC Act to end vagueness, boost regulation
The proposed Securities and Exchange Commission (SEC) Act will tackle the ambiguities of the existing law while introducing key features for capital market development apart from enhancing regulation.
Viraj Dayaratna, SEC Chairman told the Business Times recently that ‘all’ the market offences have been defined in the Act and the conduct that would amount to an offence has been spelt out with clarity. “The exceptions to the offences also have been spelt out taking away the ambiguity and grey areas in the current Act,” he added. He noted that such offences are to be tried at the High Court. ‘Securities’ have been redefined considering new developments all over the world while recognising stock market operators, collective investment schemes and derivatives.
The provisions pertaining to whistle blowers such as safeguarding and rewarding their conduct will assist in dissuading capital market misconduct, Mr. Dayaratna pointed out. The new law proposes to introduce market makers as a market intermediary to ensure an efficient exchange of securities between buyers and sellers. In a bid to protect non sophisticated investors to expand the product range, persons who will qualify as accredited investors are also defined.
“Although the proposed law contains many provisions that will enhance the powers of the SEC with regard to regulation they are meant to function as a deterrent and in no way are they excessive. All stakeholders as well as the public have been consulted and the process of drafting has been done with expert assistance from the World Bank over several years,” Mr. Dayaratna noted.
“Although the provisions may seem to have envisaged aspects of a more mature market operating at its full potential, our aim was to ensure that the necessary legal provisions are in place to meet the requirements and challenges that our market may face in time to come,” he said, adding: “We have made every attempt to ensure that there are no grey areas or ambiguities in the provisions, but a lot depends on their interpretation and let me say in lighter vein that it depends mostly on the interests of the clients whom they represent.”