Friday Nov 15, 2024
Friday Nov 15, 2024
Friday, 27 November 2020 00:15 - - {{hitsCtrl.values.hits}}
Key stakeholders of the capital market this week met to take stock of the healthy revival, in the backdrop of increased investor activity and Government expectations to boost listing as well as fair and robust trading.
Convened by the capital market regulator, the Securities and Exchange Commission, the meeting was chaired by SEC Chairman Viraj Dayaratne PC and included senior SEC officials, Colombo Stock Exchange (CSE) Chairman Dumith Fernando and officials, Colombo Stock Brokers Association President Kosala Gamage and CEOs of broking firms.
On Wednesday the CSE's All Share Price Index ASPI turned positive year-to-date and marked a significant turnaround considering the index was down 30% on 12 May. Daily turnover has been averaging over Rs. 1.6 billion including multiple strikes of over or near Rs. 5 billion in recent months.
The meeting, the first since reopening of the market after COVID-induced lockdown, assessed the effectiveness of the end-to-end digitalisation measures implemented last month. Discussions centred on further measures that can be taken to improve the digital initiatives.
The SEC Chairman acknowledged the support and effort provided by the stock broking community to roll out digitalisation initiatives which he said were timely and ensured the smooth functioning of the stock market operations without physical presence. The initiatives proved effective when the CSE functioned without disruptions when Fort was declared an isolated area for a week recently.
At the meeting broking firm CEOs expressed their appreciation of the digitalisation initiative and pointed out that investors and the stockbrokers alike were reaping the benefits of this move.
However it was noted that a significant number of existing investors were yet to provide their mobile numbers and email addresses to facilitate trade alerts and contract notes in digital form.
The SEC Chief stressed the need to encourage more investors to provide these details since it was beneficial to clients to ensure that the brokers had followed their instructions.
Brokers also said a significant number of investors used cheques to settle dues and stockbrokers were settling their clients via electronic means, hence there was a mismatch of funds, and requested the regulator to look into this matter and take suitable measures.
The SEC informed the stockbrokers that the CSE had been informed to take all required measures to address any operational issues in a timely manner. CSE officials present updated the meeting on some of the ongoing initiatives in this regard as well.
Stockbrokers were told that with the increased market activities, as the regulator the SEC was strengthening supervision and surveillance divisions to ensure that nothing untoward happened in the market.
The SEC Chairman requested stockbrokers to follow self-regulation, indicating if they conducted their affairs in accordance with laws and regulations, there would be no necessity for regulator involvement.
Dayaratne also urged the brokers to fulfil their fiduciary duties and ensure that proper risk management and compliance mechanisms were in place to ensure that no prohibited conduct took place in the market.
“The SEC will not be complacent and turn a blind eye to untoward activities,” the Chairman had stressed and informed brokers that this was a journey that the entire capital market community had to take together and requested the broking community to cooperate to maintain market integrity.
It was noted that with the popularity of social media, an influx of investment advice had sprung up on these channels. Brokers were requested to work in tandem with the regulator and the CSE to protect the market by being vigilant and ensuring that social media content was not detrimental to the market.
The meeting was told the SEC and CSE were in the process of drafting a Framework of Good Surveillance Practices for registered investment advisors and requested the stockbrokers to join hands to provide investor education to encourage more retail investor participation.
The SEC Chairman emphasised the fact that the SEC was not trying to control freedom of expression but indicated that platforms users/handlers should not violate SEC Rules.
He also said the SEC had recently launched social media platforms such as a Facebook page, a Twitter account and a YouTube channel and requested stockbrokers to encourage investors to follow those platforms.
SEC Director General Chinthaka Mendis, Director Surveillance Prabash Wanigatunge and Director External Relations and Capital Market Education Tushara Jayaratne and CSE Chief Executive Officer Rajeeva Bandaranaike and Chief Regulatory Officer Renuke Wijayawardhane were among the officials who attended the meeting.
