SEC Chairman calls on CB Governor

• SEC Chairman highlights need for establishing integrated CCP during meeting
• Seeks CB approval to changes to KYC laws regarding opening of CDS accounts online 
• Discusses ways to enhance EPF’s participation in market

Securities and Exchange Commission (SEC) Chairman Viraj Dayaratne PC paid a courtesy call on Central Bank Governor Professor W.D. Lakshman recently. He was accompanied by SEC Director General Chinthaka Mendis.

This meeting provided an opportunity for the Governor and the Chairman to share and exchange views on issues of mutual interest as well as certain specific matters regarding which the SEC required Central 
Bank support.

The SEC Chairman explained to the Governor that there had been an initiative under the Financial Sector Modernisation Project (FSMP) funded by the World Bank to set up an integrated Central Counter Party system (CCP) with regard to settlement of securities. 

However, later the Central Bank decided to limit the CCP for only government securities and domestic foreign currency transactions in the initial phase. 

The Chairman explained the importance of including equity as well in the CCP and requested the Governor to explore the possibility of establishing an integrated CCP which will certainly enhance the credibility of the capital market of Sri Lanka and boost investor confidence, particularly that of 
international investors.

The Governor was also briefed on the stock market digitization initiative undertaken jointly by the SEC and the Colombo Stock Exchange (CSE) and the Chairman indicated that they were seeking the approval of the Central Bank with regard to certain changes that had been proposed to the know-your-customer (KYC) rules at the point of opening Central Depository Systems accounts online.

Additionally, discussions were also held over the prospect of enhancing investments of the Employees’ Provident Fund (EPF), Sri Lanka’s largest pension fund in the Colombo stock market with suitable due diligence. Such a move is expected to provide above average returns to EPF members and also would invigorate the capital market.
The Governor agreed to consider the matters and the meeting ended on a positive note.