Capital market regulator wants more pension fund participation in bourse

The Securities Exchange Commission (SEC) would like to see greater investments from the state-controlled private sector pension funds – the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) – in the Colombo bourse. “The EPF and government funds should increase their investments in the Colombo Stock Exchange (CSE).

We expect the EPF to at least double its investments to 14 percent in the short term and 20 percent in the long term,” SEC Chairman Tilak Karunaratne said. He said that was a strategy followed by the Malaysian government to increase the confidence of their stock exchange. The CSE has been performing poorly so far this year.

The EPF fund is worth over Rs.1.4 trillion and is under the guardianship of the Central Bank. Under the past government, the EPF invested in stocks of commercial banks, tantamount to insider trading.

The new regime, which criticized the move, is yet to take any action in this regard. However, the EPF was recently seen shedding its investments in key blue-chip conglomerates.Central Bank Governor Arjuna Mahendran claimed that more divestments are likely as the EPF is required to keep at least 30 percent of its fund liquid for withdrawal by its members under the 2015 interim budget and pay Rs.1,000 to each EPF account older than 10 years, under a proposal by former President Mahinda Rajapaksa.However, Mahendran said that he was not sure why the EPF was concurrently purchasing government securities in the secondary market.

Open forum on public free float

Minimum Public Float: An Open Discussion’ is designed to extend an opportunity for listed companies to air views on the policy directive promulgated by the SEC. Accordingly, the Chairman, Commission Members, Director General and officials of the SEC along with the Chairman, Chief Executive Officer and officials of the CSE are expected to spearhead the discussion. The SEC has invited the chairmen, chief executive officers and other senior officials of listed companies to share their perspective by attending the forum.

The SEC, with the participation of the CSE, is conducting a forum to discuss the rules imposed on maintaining a minimum public float. The forum will be held on April 6, 2016 at Cinnamon Lakeside Colombo from 2:00 p.m. to 4:30 p.m.