CCTV, new auction system among steps to strengthen bond trading: CB

Nov 29, 2016 (LBO) – Sri Lanka’s Central Bank has taken several steps to improve supervision and regulation of the government securities market, the Central Bank governor said on Tuesday.

“The Central Bank has been trying to address some very difficult issues in these areas,” Governor Indrajit Coomaraswamy said.

Among steps taken, the Public Debt Department has introduced pre-bid meetings with primary dealers, and since June a decision has been taken to not accept more than the offered amount at auctions, he added.

The Bloomberg trading platform was introduced for greater price discovery and transparency, and the volume of trading on the platform has increased significantly, Coomaraswamy said.

An electronic trading platform and bond clearing house could be in place within 12 months, while a hybrid system of competitive and non-competitive bidding is being looked at for auctions.

CCTV cameras in relevant areas of Public Debt Department have been introduced, and will be introduced in the Employees Provident Fund trading room. EPF traders will also have to use official phones, according to these proposals, he said.

A separate Debt Management Office is being set up under the Finance Ministry, which is a significant development, Coomaraswamy said, as the Central Bank has had to deal with conflict of interest in this regard over the years.

With regard to primary dealer Perpetual Treasuries, an onsite examination has been completed, and the Monetary Board has taken action both in September and after its meeting last Friday.

Coomaraswamy said details of these actions will be revealed in due course: “We have taken action, but I can’t reveal details about it.”

Recommendations on enhancing primary dealer regulation too will be completed by the end of the year, he said.