SEC activates slew of rules

Over 10 rules came into effect on March 15 for the capital market, enabled by its r e g u l a t o r, the Securities and Exchange Commission ( SEC). Rules in respect of eight market intermediaries namely stockbrokers, stock dealers, credit rating agencies, corporate finance advisers, investment managers, managing companies, margin providers, and underwriters have been finalised and sent for publication in the government gazette, Viraj Dayaratna, Chairman SEC told the Business Times on Thursday.

"The rules in respect of market makers are being finalised and will be published soon," he said.

The rules for derivative brokers and derivative dealers and market makers are also being prepared and will be published when the Central Counter Party ( CCP) is ready. In December, the SEC formed a joint committee to identify the CCP’s operating model for the equity market, propose the necessary procedures for its establishment, and ultimately develop the new financial market infrastructure by year-end.

Mr. Dayaratna added that market makers' rules will help initiatives such as crowd-funding which is essentially fund raising through online platforms. He said that crowd-funding which is soliciting small amounts of funds from multiple investors through a web-based platform or social networking site for a specific project, business venture etc is being explored. Currently, the possibility of introducing equity/ debt crowd-funding and peer-to-peer lending through the E-Wallet is being studied by the regulator.

In preparing these rules all stakeholders were consulted and their suggestions have been accommodated to a great extent, Mr. Dayaratna said.

The rules in respect of the three market institutions namely Stock Exchange, Clearing House, and Central Depository were also sent for publication in the gazette on Wednesday. Here again, the stakeholders were consulted, and their suggestions were accommodated.

The Collective Investment Scheme ( CIS) Code is also being finalised, Mr.

Dayaratna added. “That will enable the setting up of Money Market Schemes, Umbrella Schemes, Exchange Traded Funds, Mutual Funds, Hedge Funds etc. It will be a huge boost since at present only Unit Trusts have been set up under the Unit Trust Code.”

The CIS Code will be published in the gazette after it is approved by the Commission at the next meeting, he said noting that instruments such as real estate investment trusts will be separately included in this code. Here also the stakeholders were consulted, and their suggestions accommodated, he added.

The regulator is also speeding up the third phase of digitalisation. “We hope to finalise this by end of next month,” Mr. Dayaratna said.