Jan 14, 2016 (LBO) – Sri Lanka’s Colombo Stock Exchange aims to establish the Central Counter Party (CCP) system, a new risk management system, by early 2017, a senior official said.
“We have to properly draft the laws. This is a difficult task but we are doing that with the help of some consultants,” Vajira Kulathilake, chairman Colombo Stock Exchange said.
“I expect by 2017 first quarter it will come and through this we can bring in new products to attract foreign investor too.”
The CCP will allow delivery upon settlement and establishing a derivatives market including short selling which will raise the Colombo bourse to international standards.
Kulathilake says that the proposed Securities and Exchange Commission act will be the legal back bone for the CCP while the proposed demutualization process would help with the governance side.
“The SEC act will be the legal back bone of the all the things that we are proposing to do, not only criminal but also civil proceedings,” he said.
“We will start the demutualization process soon and this will help the governance side.”
Analysts say that the present SEC Act was introduced in 1987 and though there were three amendments thereafter, an overall review of the provisions to align it to the global market trends has not been done.
“It has been a long time – changes have happened new products have come in and people have found ways to avoid regulation. So it is time that all this is covered,” he said.
“So actually the new act is a must to regulate these things.”