The new platform will enhance the repo trading mechanism and facilitate a buildup of liquidity in Sri Lanka's corporate debt market.
Sri Lankan companies will be allowed to raise debt and equity in foreign currency on the Colombo Stock Exchange. A new benchmark index is also being launched.
The changes at the CBSL come as Sri Lanka faces depleting foreign exchange reserves and a weakening currency.
SEC chairman Viraj Dayaratna described the new law as “futuristic”, saying it will help to increase market liquidity and attract foreign investment.
Coupled with the weaker debt repayment capacity of borrowers, Moody’s expects the move to cause a systemwide increase in the NPL ratio.
The Sri Lankan central bank has lowered the risk weights applicable to credit risk for foreign claims on the central government and residential housing loans.
The guidelines are mandatory and require immediate implementation. Three months' grace is given for a new cap on investment advisor commissions.
The SEC has asked the Colombo Stock Exchange to implement a broad programme to educate companies on the simplified processes and encourage them to list.
The interest rate cap is intended for housing loans for salaried employees, but CBSL has not indicated if it will apply to refinance loans.
The government has proposed tax incentives for newly-listed companies and investment in REITs, in addition to proposals to strengthen the banking sector.