SEC proposes joint committee to make stock market go fully digital

• SEC writes to CSE saying market lacks measures to conduct all activities digitally 
• Proposes joint committee to look into mechanisms to enable clearing and settlement activities electronically
• Says COVID-19 pandemic highlighted this need more than ever before
• CSE among only three stock exchanges currently closed due to COVID-19

The Securities and Exchange Commission (SEC) is proposing to set up a joint committee with the Colombo Stock Exchange (CSE) to identify the mechanisms required for the country’s stock market to operate its core functions digitally and enable clearing and settlement activities electronically.

SEC Director General Chinthaka Mendis in a letter to the CSE Chief Executive Rajeeva Bandaranaike said it has come to light that the CSE cannot conduct all its core activities digitally and the situation prevalent in the country as a result of the COVID-19 pandemic has highlighted this need more than ever before.

“The inadequacies of the measures currently in place at the Colombo Stock Exchange to conduct all its core activities digitally came to light during the correspondence exchanged between the CSE and the SEC recently.
You will appreciate that it is imperative to have a mechanism in place for the CSE to conduct all core activities of the stock market digitally as well as to have measures in place to ensure electronic clearing and settlement in order to keep abreast with the development of technology,” the letter read.

“The situation prevalent in the country as a result of the COVID-19 pandemic has highlighted this need more than ever before and the SEC is of the view that it is best for the SEC and CSE to jointly look in to this aspect as an urgent requirement,” it added. 

Accordingly, the SEC proposes the setting up of a Committee comprising of two members of the SEC and three officers of its Secretariat and two members of the CSE Board and three officers of its Secretariat.

“The Terms of Reference of this Committee can be broadly defined to ‘Identify measures/mechanisms required for the Colombo Stock Exchange to conduct all core activities of the stock market digitally as well as to enable clearing and settlement electronically and to make recommendations to have the said measures/mechanisms in place,” the letter read.

The letter also said that SEC Chairman Viraj Dayaratne has nominated Commission Members Manil Jayesinghe and Naresh Abeysekara as well as Director General and Directors Dr. Harshana Suriyapperuma and Prabash Wanigatunga to serve as SEC nominated members of this committee.

It added that it is upon the CSE Chairman to nominate CSE members to the committee. 

The letter also said SEC is ready to consider any alternative proposals from the CSE in this regard.

The CSE is among the only three stock exchanges currently closed across the globe due to the COVID-19 pandemic. The other two are Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange.  
The CSE has been closed since March 20.