- Three-year term of incumbent commission lapses in January
- Non-completion of investigations immediate reason against reappointment
- Several major changes expected in SEC and Demutualization bills
By Indika Sakalasooriya
A totally fresh commission is likely to be established at the Securities and Exchange Commission (SEC) shortly, following the expiry of the three-year term of the commission led by Chairman Thilak Karunaratne on January 25, this year.
The lack of action against alleged securities offenders and the so-called bossy attitude of the SEC when it comes to drafting of regulations concerning the stock market and its stakeholders are said to be the immediate reasons for the government deciding against the reappointment of the incumbent commission, Mirror Business learns.
The commission consisted of the appointed members, Thilak Karunaratne (Chairman), Suresh Shah, Ranel T. Wijesinha, Marina Fernando, Dilshani Gayathri Wijayawardana, Rajeev Amarasuriya and ex-officio members, C.J.P. Siriwardena, S.R. Attygalle, Jagath Perera and D.N.R. Siriwardena.
National Policies and Economic Affairs State Minister Dr. Harsha de Silva, under whose purview SEC falls—who seems to have been delegated all the responsibilities relevant to capital markets by his Cabinet Minister Prime Minister Ranil Wickremesinghe—last week slammed SEC for its inaction on the alleged securities frauds he himself spoke against when he was an opposition parliamentarian during the Rajapaksa government.
The state minister also appeared to have been irked by the Asian Development Bank (ADB) consultants who had advised the SEC on drafting a bill to demutualize the Colombo Stock Exchange (CSE), which was taken up in Parliament last week. De Silva was reported to have told parliament that the demutualization of the stock exchange will be carried out with wider stakeholder consensus and not on the opinions of the consultants sitting at the SEC. The bone of contention with regards to the drat Demutualization Bill is the ownership of the demutualized CSE. The founder stockbroking firms demand a 70 percent stake while the SEC is only ready to give them 60 percent. SEC, under the advice of ADB consultant Hiran Mendis, a former CSE Director General and CEO of Botswana Stock Exchange and Bill Foster, a capital market and governance consultant, is of the opinion that 40 percent ownership of the demutualized CSE should be with the Capital Market Development Fund.
State Minister de Silva last week told parliament that the third reading of the Cabinet-approved Demutualization Bill would be differed as the government did not want to shove anything down the throats of the market stakeholders.
Meanwhile, the new Securities and Exchange Commission bill, which has also received Cabinet nod and which is yet to be presented to Parliament, is also likely to undergo a number of key changes, Mirror Business learns.
The bill proposes to give wider powers to the SEC to regulate the capital market and operate as an independent regulator, somewhat similar to the Central Bank.
The SEC says the bill was drafted conforming to International Organization of Securities Commissions (IOSCO) guidelines, of which SEC is a member.