G-sec market...

G-sec market oversight to be studied

In response to calls by good governance activists to assign the regulatory oversight of the Government Securities (G-sec) market operations to the capital market regulator, the Securities and Exchange Commission (SEC), the newly appointed Central Bank Governor said the proposal requires some study prior to the changeover.

Good governance activist, Chandra Jayaratne recently wrote to the Central Bank Governor and other key public and private sector officials calling for the primary and secondary markets of government securities to be monitored and regulated by the SEC.

“I think it’s something to be looked at. We need to study it carefully and talk to other regulators and the government to see what the best possible architecture would be,” The Central Bank Governor, Dr. Indrajit Coomaraswamy said.

He added that since he is only 3 weeks into his tenure as the Governor, he needs to learn much more about the system. However, he stressed that the Central Bank has no territorial ambitions.

“The outcome that we want is the best possible regulatory framework for the country. We have no big territorial ambition or desire to protect territory,” Dr. Coomaraswamy added.

In his letter which was also released to the media, Jayaratne had attached a correspondence between him and the SEC, in which the capital market regulator had said that only a minor adjustment is required in the SEC Act to allow it to fulfill the proposed role.

He further noted that even though the Central Bank has professionals and infrastructure required for such regulation, an independent regulator is required due to the recent bond scandals which showed the Central Bank’s conflicts of interest as the issuer of government debt.

The Central Bank is also the custodian of the Employees’ Provident Fund, which is the largest public fund and investor in Sri Lanka.