New SEC Act to address issues outlined by IOSCO: official

By Chandeepa Wettasinghe
The new Securities and Exchange Commission (SEC) Act, which is currently with the Legal Draftsman’s Department, will address the gaps in the regulatory system, which were outlined by the International Organization of Securities Commissions’ (IOSCO) Country Review, an SEC official said.
“All those concerns will be taken care of under the new Act when it is passed in parliament,” SEC Director General Vajira Wijegunawardane said this week.

IOSCO’s Country Review this June noted that there were gaps in the regulatory framework, including limited formal cooperation between regulatory authorities and non regulations of market players such as investment banks and financial planners, which were the concerns Wijegunawardane was referring to.

The main feature of the new SEC Act however, would be the vesting of powers on the State to initiate civil action against alleged capital market offenders, thereby giving more teeth to the SEC, which currently has limited scope in penalizing wrongdoers, since criminal action requires proving an infraction beyond 
reasonable doubt.

Wijegunawardane said that the bill would be presented in parliament this October, and while some regulatory shortcomings would be addressed by it, other issues are covered under the SEC’s Capital Market Vision 2020 plan. “Most of the IOSCO recommendations, the Commission has committed to implement,” he said.

IOSCO  Secretary General Paul Andrews said the Sri Lankan SEC showed courage which many other regulators would not show, by allowing IOSCO to review Sri Lankan regulatory standards, and to advise on the areas which need improvement.

“It shows commitment and shows strength of character. It’s good for business in Sri Lanka to have good regulations,” he said.