Jan 15, 2010 (LBO) – Sri Lanka’s Securities and Exchange Commission (SEC) will modernize its governing law to meet market trends and introduce civil sanctions for market offenders, an official said. SEC chairwoman Indrani Sugathadasa said the 1987 SEC law has been change three times but there had been “no overall review of the provisions to align it to the global market trends”.
The law will be changed to regulate demutualized stock exchanges, central depositories and central counterparties.
Sri Lanka’s Colombo Stock Exchange is now a member owned entity owned by several founder brokers but plans are underway to ‘demutualize’ it and make it into a limited liability company.
A central counterparty is to be set up to clear transactions and prevent broker failures from triggering cascading settlement failures.
Sugathadasa said SEC was planning “civil sanctions and administrative sanctions to deal with capital market offenders and the introduction of provisions that will provide for restitution for investors.”
The SEC was also planning to license a derivative and commodities exchange and introduce rules for auditors in respect of capital market offenses.