SEC unveils plan to list SOEs, introduce digital assets to broaden capital market

By Nishel Fernando

The Securities and Exchange Commission (SEC) of Sri Lanka plans to significantly expand the nation’s capital market by listing the state-owned enterprises (SOEs), demutualising the Colombo Stock Exchange (CSE) and introducing new financial products such as digital assets, Chairman Senior Professor Hareendra Dissabandara announced yesterday.

Speaking at the Asia Pacific Chapter meeting of the Global Alliance for Banking on Values in Colombo, Prof. Dissabandara outlined an ambitious strategy to broaden the country’s investor base from its current level of less than one percent of the population to a target of 10 percent within the next decade. He emphasised that developing the capital market is crucial for sustaining Sri Lanka’s economic recovery and reducing the government’s reliance on borrowing.

A cornerstone of the plan involves listing major SOEs on the stock exchange. Prof. Dissabandara noted that the government has given a clear mandate for this move, which is expected to alleviate a significant fiscal burden from the state budget. 

“The president and finance minister have categorically mentioned that the SOEs will list on the exchange,” he said, explaining this would remove a “negative weight” from the Sri Lankan economy. The SEC is also targeting the corporate debt market, which Prof. Dissabandara described as severely underdeveloped, accounting for less than one percent of the total capital market.

To invigorate this segment, the commission plans to introduce new products, including social and green bonds. Further modernising the market’s framework, the SEC is set to demutualise the CSE within a year to enhance its governance framework, a move that separates the exchange’s ownership from the trading rights of its members.  “If you look at most of the important markets, they are already demutualised,” Prof. Dissabandara noted.

Simultaneously, the commission is developing regulations to introduce digital assets, aiming to lower transaction costs and attract a new class of investors. To achieve the 10 percent retail participation goal, the SEC has proposed a novel initiative to the government: offering a small, introductory investment portfolio to every family. “We are going to offer at least a small portfolio, so then they will get to know about markets and they will come into investment and trading,” he explained. Prof. Dissabandara asserted these reforms are supported by the government’s commitment to policy consistency, which is vital for building local and international investor confidence.