Chairman Viraj Dayaratne  

• Reiterates Bill has many features that will not only strengthen the regulatory mechanism but significantly contribute towards development of the market
• Assures every attempt made in Bill to ensure that there are no grey areas or ambiguities

The Securities and Exchange Commission (SEC) Chairman Viraj Dayaratne PC last week backed the new Bill as critical for the future and assured it will not stifle the smooth function of the market. “The market as we see it today is a dynamic one that is in need of a robust regulatory regime to cater to its current demands,” he told the seminar on the new SEC Bill organised by Asian Pathfinder and Corporate Legal Consultants in association with the Daily FT.

“If we are to build confidence and attract more investors, particularly foreign investors, it is imperative that we keep abreast with the developments taking place in other jurisdictions and also follow the standards of the international regulators’ association, the IOSCO,” Dayaratne said.

He said the SEC realised the need for the introduction of a new law and the process of drafting one commenced several years ago. “Consultants from the World Bank, experts of the industry and many other stakeholders have contributed immensely in the formulation of the proposed law. 

“There have been public consultations as well. The Bill has many features that will not only strengthen the regulatory mechanism but significantly contribute towards the development of the market,” SEC Chairman emphasised.

He said that whilst it is necessary to have adequate and effective powers to minimise market misconduct and ensure the integrity of the market, it is important for the regulator to ensure that such powers are exercised in a manner that will not stifle the smooth functioning of the market.

“We at the SEC have been mindful of this and in the discharge of our duties have demonstrated that we pay heed to this requirement,” Dayaratne said. 

“Although the proposed law contains many provisions that will enhance the powers of the SEC with regard to regulation they are meant to act as a deterrent and in no way are they excessive,” the SEC Chairman said.

“We have made every attempt to ensure that there are no grey areas or ambiguities in the provisions contained in the Bill,” he added.

He told the seminar that there is a possibility for one to question as to whether such elaborate provisions are necessary for a market such as Sri Lanka.

“Although the provisions may seem to have envisaged aspects of a more mature market operating at its full potential, our aim was to ensure that the necessary legal provisions are in place to meet the requirements and challenges that our market may face in time to come,” Dayaratne explained adding: “When a road is built anew, it is important to ensure that the road is able to take any form of traffic, ranging from a bullock cart to a Ferrari and beyond.”

SEC Chairman said the Port City will open up new avenues and opportunities and Sri Lanka’s securities market will invariably evolve to greater heights. He said steps are also being taken to introduce legislation to demutualise the Colombo Stock Exchange which will further enhance the efficiency of its operations.

“We have taken into consideration all these factors and provided for them in the proposed law,” he said.

Dayaratne also said ultimately a lot depends on the interpretation of the law by lawyers and “let me say in a lighter vein that it depends mostly on the interests of the clients whom they represent”.

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