The SEC is also planning to go ahead with the demutualisation of the Colombo Stock Exchange and set up a Central Counter Party/Depository. It will also take measures to develop the country’s ‘dead’ corporate debt market.
SEC Chairperson Ms. Indrani Sugathadasa addressing stakeholders yesterday (14) said, "The amendment to SEC Act 1987 would include provisions to introduce civil and administrative sanctions to deal with capital market offenders and the introduction of provisions that would provide for restitution for investors."
Until now, the SEC was in the habit of compounding charges against market offenders and several cases have also been heard in Magistrate courts.
"Offenders are being charged under criminal sanctions where their guilt must be proven beyond a doubt. Some cases are still pending before the Court of Appeal," SEC Director General Malik Cader said, adding that the amendments to the SEC Act would give the SEC the civil sanctions required to take more effective action against market offenders.
Offenders’ ill-gotten profits were earlier compounded into a compensation fund, sometimes even without admission of guilt.
The SEC is also finalising regulatory and administrative details of introducing a commodity and derivative market in Sri Lanka. The SEC has been working on introducing derivatives for several years, but market sophistication is yet to grow.
The corporate debt market is seen as a viable and cheaper source for rising financing and making capital gains, but unlike the government securities market the corporate debt market remains dormant.
"The Per Capita Income in Sri Lanka is expected to double in 2016. It is estimated that Rs 1 Trillion of this will be generated from sectors other than the Banking Sector, a significant portion of which will be generated from the corporate debt market. In this regard the SEC will follow up on the Corporate Bond market Development Implementation Plan approved by the Commission. Also the SEC will liaise with the CSE on encouraging trading on the DEX System," Ms. Sugathadasa said.
Sujeewa Mudalige, SEC commission member, said 58 debentures were listed on the CSE valued at Rs. 30 billion and for some time the corporate debt market has been dead. But for the first month of this year, there has been a significant improvement. There have been some new issues several of them private. We need to look at ways to bringing private issues also in to the regulatory fold," he said.
Ms. Sugathadasa said, "The amended SEC Act would include legal provisions that would provide for Demutualized Exchanges, profit sharing, listing of a Demutualized Exchange, limitation of shareholding, Government appointees to the board of a Demutualized Exchange and public interest mandate."
"The Act will also include provisions to effectively regulate a Central Counter Party (CCP)/ Depositories. Establishment of a Central Counter Party will reduce the amount of counterparty risk that market participants are exposed to," she said.
She said steps have been taken to present frame suitable guidelines to encourage the introduction of new funds namely Real Estate Investment Trusts (REIT’s) and Exchange Traded Funds.
Auditors and market analysts would also be issued with guidelines this year.
The Colombo Stock Exchange became the second best exchange in the world for the second year in succession in 2010, with the All Share Price Index growing 96 percent. Market Capitalisation more than doubled to Rs. 2.21 trillion and Ms. Sugathadasa said the exchange could top Rs. 3 trillion this year.
She said there would be 50 to 60 new listings this year, with 25 of them being registered finance companies which need to fulfil a regulatory requirement by listing.
source - www.island.lk
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