Vajira on regulatory constraints
The Colombo Stock Exchange (CSE) regulator, the Securities and Exchange Commission (SEC), is facing a number of constraints in carrying out its duties in an efficient manner, according to a top official.
“Our securities law was enacted 28 years ago and needs amending to face future requirements and some of the other challenges,” SEC Director General Vajira Wijegunawardene said.
SEC Chairman Tilak Karunaratne said that all efforts would be made to fast track a new Act and get it approved by Parliament, as the current Act, which had been amended in 1991, 2003 and 2009, only stipulate criminal charges against infringers, which are harder to prove.
“The burden of proof is that much greater. However, with the new Act, imposition of fines and penalties would lead to better governance and act as a deterrence for market misconduct,” Wijegunawardene said.
He said that this perception of lax enforcement has led to a lack of professionalism among some market participants.
Recently, Prime Minister Ranil Wickremesinghe too was highly critical of the capital market, saying that three to four investors were controlling 99 percent of the market through unethical conduct.
The most prevalent have been shortterm profit gaining measures, such as pump and dump tactics.
Wijegunawardana also said there was a lack of a cohesive approach among local regulators, such as company registrars to share information.
Meanwhile, Wijegunawardana added that low levels of finance literacy among the existing and potential investors, as well as the weak technical capacity and expertise within the SEC, both of which could be improved easily, have been constraining operations in the past.
(CW)