Sri Lanka’s Securities and Exchange Commission (SEC) has introduced new regulations for Market Institutions and Intermediaries managing Shariah-compliant Whitelist Equity Indices, aiming to protect investors seeking Shariah-compliant investments.

Shariah-compliant equities are determined through a screening methodology, which includes both qualitative and quantitative measures. 

The move ensures that these indices adhere to Shariah principles while meeting global screening standards, the SEC said.

Recognising the demand for Shariah-compliant debt securities, such as Sukuks, the SEC has also approved a framework to introduce and list these products on the Colombo Stock Exchange (CSE). 

According to the capital market regulator, inclusion of accredited Shariah scholars and the compliance certification process further bolsters the credibility of listed Shariah-compliant products.

As part of the new regulations, the SEC requires Whitelist Equity Indices to be approved by at least three Shariah Scholars from its Accredited Shariah Scholars list before being published or circulated. The Shariah Scholars will review and update the screening methodology every three years to align with evolving market conditions.

Market Institutions and Intermediaries are responsible for informing investors that the indices have been approved by the necessary scholars, ensuring transparency in Shariah-compliant investments.