The Securities Exchange Commission (SEC) and the Colombo Stock Exchange (CSE) are awaiting a valuation report from Ernst & Young, a leading firm of Chartered Accountants.
“The CSE obtained the services of Ernst & Young to conduct a proper valuation of the CSE and propose a fair distribution of ownership among the initial stakeholders of the demutualized Stock Exchange. The valuation report is expected to be forwarded to the SEC in the near future,” the capital market regulator said in a statement last week.
The SEC, having obtained cabinet approval to demutualize the CSE in the early part of the year had forwarded the final draft of the Demutualization Bill to the Ministry of Finance and Planning and the translation of the Bill into Sinhala and Tamil is currently being finalized.
At present the Colombo Stock Exchange (CSE) operates as a member owned, not for profit company limited by guarantee. It is envisaged that demutualization of the CSE will lead to a more flexible governance structure, separate trading rights from ownership; ensure shareholder accountability and greater transparency. It will also give rise to facilitation of improved services to its customers and make a greater contribution to the economy as a whole.
Commenting on what progress it had made on making Amendments to the SEC Act, the Commission said The Ministry of Finance and Planning (MOF) has convened a high level special committee consisting of 14 members, representing the Central Bank of Sri Lanka, corporate sector, the Bar and the Ministry to review the proposed amendments prior to submitting it to the Cabinet of Ministers.
The SEC with the technical assistance from the FIRST initiative of the World Bank drafted the policy papers for the identified amendments to the SEC Act and sought comments from the public on the same. Thereafter, after having obtained the approval from the Members of the Commission of the SEC the consolidated draft of the proposed amendments to the SEC Act was finalized and forwarded to the Ministry of Finance and Planning.
“The overall development of the capital market requires modern infrastructure, a wide range of financial products and a robust legal framework to access and mobilize capital. The securities law in Sri Lanka was enacted 25 years ago and is not equipped to deal with future needs and emerging challenges facing modern capital markets. The proposed SEC Act amendments are aimed at providing the necessary toolkit to facilitate effective regulation,” the SEC said.
An extract from the press release issued by the SEC follows.
Broker Back Office Systems
With the expansion of the capital market, broker firms require a uniform robust back office system that could handle the volume, improve the trading and settlement efficiency with necessary risk mitigating and management mechanisms.
In order to facilitate this initiative the SEC called for Expression of Interests (EOIs) and upon evaluating the proposals shortlisted technically compliant vendors. Thereafter the brokers have been requested to contract with a technically complaint vendor by 31st December 2014 and to implement the system ending 30th June 2015.
Development of New Products
A vibrant capital market is measured by the depth and breadth of the market with a wide variety of instruments that can cater to the different needs of issuers and varying risk return appetites of investors. It is also important that the capital market provides a viable alternative to conventional market products that will expand the capital market activities and help the economy grow.
During the year the SEC licensed the country’s first ever Dollar Denominated unit trust in order to internationalize the investment industry in Sri Lanka which has been so far restricted to Rupee investments. This venture will undoubtedly support Sri Lanka’s effort to become a regional financial hub.
SEC is also currently focusing on introducing Real Estate Investment Trusts (REITs) and Exchange Traded Funds (ETF’s) to the Sri Lankan capital market. At present SEC is studying REITS in regional markets and the regulatory framework necessary to protect potential investors.
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“The CSE obtained the services of Ernst & Young to conduct a proper valuation of the CSE and propose a fair distribution of ownership among the initial stakeholders of the demutualized Stock Exchange. The valuation report is expected to be forwarded to the SEC in the near future,” the capital market regulator said in a statement last week.
The SEC, having obtained cabinet approval to demutualize the CSE in the early part of the year had forwarded the final draft of the Demutualization Bill to the Ministry of Finance and Planning and the translation of the Bill into Sinhala and Tamil is currently being finalized.
At present the Colombo Stock Exchange (CSE) operates as a member owned, not for profit company limited by guarantee. It is envisaged that demutualization of the CSE will lead to a more flexible governance structure, separate trading rights from ownership; ensure shareholder accountability and greater transparency. It will also give rise to facilitation of improved services to its customers and make a greater contribution to the economy as a whole.
Commenting on what progress it had made on making Amendments to the SEC Act, the Commission said The Ministry of Finance and Planning (MOF) has convened a high level special committee consisting of 14 members, representing the Central Bank of Sri Lanka, corporate sector, the Bar and the Ministry to review the proposed amendments prior to submitting it to the Cabinet of Ministers.
The SEC with the technical assistance from the FIRST initiative of the World Bank drafted the policy papers for the identified amendments to the SEC Act and sought comments from the public on the same. Thereafter, after having obtained the approval from the Members of the Commission of the SEC the consolidated draft of the proposed amendments to the SEC Act was finalized and forwarded to the Ministry of Finance and Planning.
“The overall development of the capital market requires modern infrastructure, a wide range of financial products and a robust legal framework to access and mobilize capital. The securities law in Sri Lanka was enacted 25 years ago and is not equipped to deal with future needs and emerging challenges facing modern capital markets. The proposed SEC Act amendments are aimed at providing the necessary toolkit to facilitate effective regulation,” the SEC said.
An extract from the press release issued by the SEC follows.
Broker Back Office Systems
With the expansion of the capital market, broker firms require a uniform robust back office system that could handle the volume, improve the trading and settlement efficiency with necessary risk mitigating and management mechanisms.
In order to facilitate this initiative the SEC called for Expression of Interests (EOIs) and upon evaluating the proposals shortlisted technically compliant vendors. Thereafter the brokers have been requested to contract with a technically complaint vendor by 31st December 2014 and to implement the system ending 30th June 2015.
Development of New Products
A vibrant capital market is measured by the depth and breadth of the market with a wide variety of instruments that can cater to the different needs of issuers and varying risk return appetites of investors. It is also important that the capital market provides a viable alternative to conventional market products that will expand the capital market activities and help the economy grow.
During the year the SEC licensed the country’s first ever Dollar Denominated unit trust in order to internationalize the investment industry in Sri Lanka which has been so far restricted to Rupee investments. This venture will undoubtedly support Sri Lanka’s effort to become a regional financial hub.
SEC is also currently focusing on introducing Real Estate Investment Trusts (REITs) and Exchange Traded Funds (ETF’s) to the Sri Lankan capital market. At present SEC is studying REITS in regional markets and the regulatory framework necessary to protect potential investors.
www.nation.lk
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