SEC Act to be amended in 3Q


By Ravi Ladduwahetty

The Securities and Exchange Commission Act will be amended in the third quarter of 2012 aimed at bringing in more regulations in consonance with more matured markets in the world.

"The SEC Act was brought in 1987 and will be celebrating 25 years this year and we will be bringing legislation which will be in line with more mature capital markets in the world," Securities and Exchange Commission Chairman Tilak Karunaratne told The Island Financial Review yesterday.

Responding to a question as to what the reforms were, the SEC Chief was extremely tight lipped on what the new laws were to be, but added that they were geared to protect retail investors. "This will be a part of the upgrade of the Regulators’ Act and the amendments have been sent to the Legal Draftsman who will, in turn present it to Cabinet and Parliament," he said.

Asked about the perceptions among stock brokers of the market being overregulated by the SEC and the Colombo Stock Exchange, he said that the Colombo Stock Exchange was one of the least regulated markets in the world in relation to capital markets in the United States and the European Union. "We are not even as strict as South Asian and ASEAN capital markets," he said.

"This is one of the reasons why we have proposed amendments to the SEC Act which will give more teeth to the market and also in terms of the retail investors," he said.

Debunking perceptions that the market was over – regulated, he said that perception was held only by some high net worth investors and some brokers who wanted ‘the freedom of the wild ass’ to do as they please and to manipulate the market with their own ulterior motives.

"I must say that with all due fairness, it is only a few brokers and a few high net worth individuals who want to enter and exit the market in a spirit of ‘pump and dump’ leaving millions of retail investors in the lurch," he said

The fact that no investor has been sent to jail by the SEC by itself was sufficient testimony that the Colombo stock market was not over regulated, he said, reiterating what former SEC, Ceylon Chamber and Aitken Spence Chairman C.P. De Silva had told the meeting that Capital Market professionals had with President Mahinda Rajapaksa last week.

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