New SEC bill to be presented to Parliament for approval

The Cabinet of Ministers has approved the long-awaited new Securities and Exchange Commission (SEC) bill to be published in the government gazette and is to be presented to the Parliament for approval.

The draft law seeks to strengthen regulatory powers of the capital market regulator and to facilitate new product developments while providing necessary provisions for the regulation of a demutualized stock exchange. 
Prime Minister Mahinda Rajapaksa in his capacity as Finance Minister on Monday sought the approval of the Cabinet of Ministers for the draft Securities and Exchange Commission of Sri Lanka Bill 2020.

Last October, the Cabinet of Ministers granted approval to draft the Securities and Exchange Commission of Sri Lanka Bill. Accordingly, the bill was drafted by the Legal Draftsman, and it also secured the clearance of the Attorney General.

The new SEC law has been on the agenda for several years, resulting in multiple drafts following numerous rounds of stakeholder consultation. 

The new SEC law is expected to empower the SEC to regulate a demutualized stock exchange. After securing the approval of Parliament for the law, the government is expected to present another bill for the demutualization of the Colombo Stock Exchange (CSE). 

The draft SEC law is aimed at better market regulation and a more efficient capital market. 

It is expected to improve governance standards while introducing a wide range of enforcement mechanisms to deal with market misconduct, which would be a crucial element to safeguard investor rights as the market expands.

Further, it’s expected to provide the legal framework for the establishment of a clearing house acting as a Central Counter Party (CCP).

The draft law is also expected to recognise new categories of market intermediaries and to facilitate new product development while strengthening the effectiveness of market regulation at the same time.