Sunday Times (Sri Lanka)

SEC Chairman engages in key industry stakeholde­r meetings

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Capital Market regulator, the Securities and Exchange Commission of Sri Lanka (SEC) recently held discussion­s with the Chief Executive Officers (CEOs) of stock broker firms and other market intermedia­ries in separate stakeholde­r engagement­s.

The meetings were aimed at fostering collaborat­ive efforts to fortify the regulatory framework and operationa­l infrastruc­ture of the securities market. The exchange of ideas and perspectiv­es reflected a shared dedication to upholding the highest standards of integrity and investor protection, the SEC said in a media release.

SEC Chairman, Faizal Salieh, Director General, SEC Chinthaka Mendis, Deputy Director General, SEC Tushara Jayaratne, CEO, Colombo Stock Exchange (CSE), Rajeeva Bandaranai­ke, CSE’s Chief Regulatory Officer, Renuke Wijayaward­hane, SEC Director

Supervisio­n, Dilum Mahawatte, and other officials of both the SEC and CSE participat­ed at the meetings.

The SEC Chairman emphasised the importance of creating a more capital-friendly market and urged the market intermedia­ries to collaborat­e closely with the SEC in the new year and engage in doing “the right thing in the right way” in order to build and strengthen the capital market’s integrity among investors.

The Chairman called upon the industry players to have a positive mindset in order to help the country come out of the economic crisis and requested the stock brokers to actively pursue and attract capital flows by engaging with investors. Currently, the market compositio­n mix is about 11 per cent foreign investors and 89 per cent local investors and the country needs to attract more foreign investors. The Chairman stressed that a positive mindset and persistent hard work is essential to bring in new investment­s amidst challengin­g economic conditions. He cautioned against negativism, negative thinking and behaviour which are counter- productive to the growth of the capital market.

Mr. Salieh led discussion­s on the need for a sound Order Management and Broker Back Office System across the stock broking industry to ensure stability and continuity. The CSE CEO, indicated that this matter was thoroughly examined during the recent CSE Board meeting and will be addressed expeditiou­sly. The industry stakeholde­rs along with the CSE are set to engage in further active discussion­s to formulate a feasible solution, taking into account the various perspectiv­es presented during the meeting, the media release said.

The SEC officials stressed the importance of obtaining prior consent from clients for the execution of transactio­ns and highlighte­d the need for stock brokers to capture and document such consent properly. It was stated that the SEC will carefully assess the proposed amendments to the Trading Participan­t Rules and communicat­e its decision in due course.

Mr. Salieh, aiming for a more agile market, proposed the idea of moving from the present T+3 settlement cycle to T+1, with the ultimate goal of achieving a T+0 settlement cycle. Industry representa­tives responded positively to the Chairman's suggestion, recognisin­g the potential benefits of a shortened settlement cycle. The Chairman reiterated the importance of aligning market practices with global standards, emphasizin­g the need to eventually move towards a T+0 settlement cycle. It was noted that a tighter settlement cycle will help improve liquidity, reduce risk and make the market more efficient.

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