The new Securities and Exchange Commission (SEC) Act is now finalized and the SEC Commission will formally approve the amendments proposed within two weeks before it will be sent for Cabinet approval next month, the SEC Chairman said.
“Once the Cabinet approval is given, it will be sent to the Legal Draftsman. But how long it will take with the Legal Draftsman is beyond the SEC’s control. But hopefully, within six months things will be finalized in order to enact the new legislation,” SEC Chairman Dr. Nalaka Godahewa confided.
The new act will provide for the all-time licencing of demutualised stock exchanges, derivative exchanges, clearing houses and central depositories among other initiatives required for a robust legal framework to the SEC to regulate the capital market.
Speaking of the demutualization of the Colombo Stock Exchange ( CSE), another highest priority in the SEC’s agenda, Dr. Godahewa said, although the management of any number of demutualised stock exchanges would be provided through the new SEC Act, the demutualization process is yet to be determined by the CSE.
“There are two things here. One is the legislation permitting the demutualising of the CSE. This needs to be determined by the CSE. The next is the management of such a demutualized exchange. This will be provided by the new act,” he explained.
Another important provision under the new SEC Act is that it empowers the SEC to institute civil sanctions and administrative actions against capital market offenders. Under existing provisions, legal action against the perpetrators can only be taken under the Criminal Law.
Meanwhile, a number of provisions have also been included to enhance the protection of investors including whistle blow protection and powers to protect investors’ assets.
In addition, corporate finance advisors, financial planners, analysts, derivative brokers and dealers will be brought under the purview of the SEC under the new act.
Further, the jurisdiction of the SEC will be extended in respect of companies and market intermediaries making or advising on the offering of debentures to the public, in order to provide an impetus to develop the corporate bond market in Sri Lanka.