Jayasekera, himself a stock broker in the mid-1990s, said the Colombo Stock Exchange had not grown since then to keep pace with the growth of the economy.
He spoke as a member of the panel at the 8th LBR LBO CFO FORUM which had as its theme 'CSE: A Blood Bath or a Gold Mine', held recently at Ceylon Continental Hotel.
The forum debated the phenomenal rise of the CSE after the end of the island's 30-year ethnic war in 2009.
The stock market boom made it one of the world's best-performing bourses but also prompted regulators to impose price bands and curb trading on borrowed money after extraordinary price volatility.
Analysts said cheap money also helped fire the stock market bubble with interest rates now generally below the effective inflation rate which has fallen off record highs three years ago.
"Our stock market is still very small and lacks the breadth and depth needed for a market to sustain itself," Jayasekera said. "If you have a critical size, then a few people won't be able to create waves."
Jayasekera said the number of companies listed on the CSE had not grown enough, as a result of which, a growing number of stock brokers were chasing almost the same number of firms. The number of investors had also increased.
"If you really see the situation between 1994 and now, our gross domestic product at current market prices has increased many fold and there's no denying the fact the country's economic potential has been unlocked (after the war)."
But he said the number of listed firms had increased to only around 265 today from 225 in 1994.
In 1997, when Jayasekera left the stock broking industry, he said there were about 14 - 15 stock brokers. Today the CSE has 29 members and trading members.
"The conclusion is that we all ride on the same companies," Jayasekera said.
The number of research analysts had also doubled during this period to about 100, he said, noting that this meant there was adequate research about listed companies.
"I think the market is fairly well researched and if the market is fairly well researched there is no way prices can move up and down the way it has been described - it is unbelievable," Jayasekera.
"Then we need to find out why the number of listed firms has not increased in tandem with economic growth."
Jayasekera said it may be because it was not really "worthwhile" for companies to obtain a listing in the CSE.
"If so there would have been many more companies that would have gone to the stock market to raise money," he said.
"My experience in running listed companies is that it is not worth listing a company unless you have that critical size - unless you want to flog your company; you can take it to the market and flog it and go home."
More transparency was also needed about investments by the funds investing in the CSE, Jayasekera said.
"There are 10-15 big funds operating in the country and we need to identify what contribution these funds have made to the growth of the stock market, and, if you take the effect of those funds out where would the stock market be," he said.
"Also, you know most of these funds are not accountable. The investing public have a right to know what these funds that are not accountable are buying and selling because they make a huge contribution to the waves that are being created in the stock market."My experience is, whether an investor is big or small, the best way to make money is to get hold of funds that are not accountable."