Sri Lanka SEC to Overhaul Capital Market Rules in Stages

“The market has evolved over the past ten years and technology has also raised the bar. There is a need to be in line with the times,” SEC Chairman Viraj Dayaratne told Regulation Asia.

Sri Lanka’s SEC (Securities and Exchange Commission) is looking to revamp its capital market rules, according to officials.

The CSE (Colombo Stock Exchange) listing rules, the stockbroker rules, and the rules for market intermediaries – including rating agencies, fund managers, underwriters, unit trusts, margin providers and investment managers – will be overhauled.

“The regulations need to be predictable and consistent. The market has evolved over the past ten years and technology has also raised the bar. There is a need to be in line with the times,” Viraj Dayaratne, Chairman SEC told Regulation Asia.

Some of the impending rule changes were drafted a long time ago but now they are taking effect, he explained.

“The changes will be done in stages. We need a standard set of guidelines for all categories of market intermediaries across the board and to ensure there is consistency.”

The new rules will include an obligation for auditors to report any malpractices and irregularities they find when auditing accounts of a listed company. The fit and proper criteria for stockbrokers will be rehashed in detail, Dayaratna said.

“These rule changes are done in order to be in line with the IOSCO requirements as well.”

According to Dayaratna, a memorandum of understanding on information sharing that was struck in 2017 between the three regulators – IBSL (Insurance Board of Sri Lanka), CBSL (Central Bank of Sri Lanka) and the SEC – is now being put into effect and will assist with rehashing the rules.

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