Only 20% of stock market probes need to be completed
Sri Lanka’s capital market regulator, the Securities and Exchange Commission (SEC) during the past three years has managed to clear over 80 per cent of the backlog of offences by market manipulators over the past decade.
This was mostly possible after the regulator managed to replace its 34-year archaic law when Parliament passed the SEC Act on September 7, 2022.
Viraj Dayaratna, outgoing Chairman SEC told the Business Times that the new law is different from the old as it is more futuristic. “SEC’s core function is regulation. We have identified more offences in the new Act and separated them into categories.” He said ‘all’ market offences are defined in the Act and the conduct that would amount to an offence is defined clearly. “The exceptions to the offences are also spelled out taking away the ambiguity and grey areas in the current Act,” he added.
The rules need to be clear, predictable, and consistent, while the guidelines need to be set, he said. “The exceptions to the offences are also spelled out taking away the ambiguity and grey areas in the current Act,” he added.
“We had some borderline cases where we did not go as far as instituting legal action, but depending on the circumstance, we warned the offenders. To me, in terms of market offenders, there are no big or small guns. We have taken a pragmatic approach in implementing regulation and the necessary steps were taken to discipline the offenders.” He added that most of the investigation reports have been finalised. “Again, I felt that certain measures should have been taken earlier. But I am happy with the progress that has been made by the SEC in terms of investigations.”
I would have been happier if we had been able to do them earlier,” he added.
However, it is up to Mr. Dayaratne’s successor, to complete the pending investigations.
Mr. Dayaratne also said that the regulator has proposed a mechanism to flag timely disclosures to the market operator, the Colombo Stock Exchange (CSE). “The CSE agreed to improve the supervision function to ensure timely disclosures are made.”
The Act is also armed with, provisions for introducing new products and new investment options which are essential to increase liquidity and attract sizeable foreign investments, he said noting that already provisional approval has been granted to a host of new products which will open new avenues to raise funds and finance businesses such as crowdfunding.
The CSE has also identified a party to set up its central counterparty system latest by the second quarter, Mr. Dayaratne added.
He said that 2021 was the best year for the stock exchange in terms of foreign inflows etc. With the infrastructure laid out in all aspects of the market, the CSE is set for new heights this year, Mr. Dayaratne said.
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