SEC surveillance to deter manipulators

The Securities and Exchange Commission (SEC) is to implement an automated surveillance system that will track price manipulation and related offences in the stock market by the first quarter of next year.

“We are talking to India to get some insights on their system, because it is a good system which has worked there,” SEC Chairman, Gamini Wickramasinghe told The Sunday Times FT, adding that the system will cost around Rs. 30 million.

He said that similar systems are in force in Thailand and Malaysia, whereas developed countries which have mature markets have more advanced systems.

SEC Director General, Channa de Silva said that many details will be fed into the system on all listed company information. “Once the system is implemented, it will request for all information relating to a company, including the names and other details of the directors’ relatives. As such any sort of formulation or parameter can be fed into this system and it will flag out any irregularities,” he pointed out, adding that this will help the SEC deal with such matters promptly.

“The SEC will be able to address price manipulation and other offences in a more professional manner and on a real time basis,” he explained. This decision by the SEC comes on the back of the regulator charging several individuals of price manipulation and other stock market offences. De Silva said that presently at the Colombo Stock Exchange (CSE), there is heavy human interaction in terms of gathering data, filing them accordingly and retrieving them.

“To do all this on a real time basis is a major challenge and as the stock market is opening up, it is becoming increasingly difficult,” he added, saying that the electronic tracking system of price manipulations will deter would be offenders considerably.
He said that such a system is also a sign of maturity in the stock market where international funds and foreign investor confidence will rise. “This will also make the stock market more professional,” De Silva said, explaining that the 28th and 29th floors of the World Trade Centre will house the new surveillance area of the SEC.