Govt. faults predecessor for investors losing confidence in CSE

 State Minister of Finance Eran Wickramaratne 

• Eran says SEC has worked to restore investor confidence since 2015
• Forensic audit will reveal shady CSE deals between 2010-2011
• Bandula Gunawardena says stock market has benefited from GR announcing Presidential candidacy

By Ashwin Hemmathagama

 – Our Lobby Correspondent

State Minister of Finance Eran Wickramaratne charged the previous Government for allowing investors to lose confidence and exit the Colombo Stock Exchange (CSE), pulling out their investments, but the Securities and Exchange Commission (SEC) has worked to restore investor confidence.

Responding to a supplementary question yesterday in Parliament, Minister Wickramaratne held the report of a much-awaited forensic audit, which will be moved soon, will reveal the shady deals during 2010 and 2011 that tarnished the image of the CSE.

“Other than the foreign investors, our Employees Provident Fund (EPF) was investing considerably at the stock market. The trust in the stock market fell before 2015. After 2015, the Securities and Exchange Commission (SEC) started investigating these EPF investments, which led the EPF to stop investing in stocks 2015 - 2018. Reduced investor confidence brought down the turnover,” he said.

However, the State Minster held that the current Government has helped regain the lost investor confidence, following law and order, where results are visible on the long-run. “There are two ways. Quick results can be obtained within a dictatorship. Following the democratic method that follows laws and regulations also provides results. We have resorted to the longer path, which gives results,” he added.

Listing the steps taken to boost investor confidence, Minister Wickramaratne said: “The SEC has taken several steps to uplift the quality of service provided by stock brokering firms. By increasing minimum shareholder's funds to Rs.100 million, the stability of the firm is assessed. Introducing the capital adequacy ratios, the short-term liquidity of the brokering firms, the meeting of day-to-day requirements, and risk is assessed. The SEC and the CSE conduct joint seminars locally and abroad to attract new investors. A broker back-office system will be introduced. For this, all brokering firms were funded subjected to Rs.5 million ceiling. The brokering firms are monitored by conducting regular internal and external audits.”

United Peoples Freedom Alliance (UPFA) lawmaker Bandula Gunawardena claimed the announcement of the candidacy of Gotabaya Rajapaksa has helped to gain investor confidence, and that the market has started to gain significantly during the last few days.

“The stock exchange was going down since the investors got cold feet after the Central Bank Treasury bond scandal. Thereafter there had been no upward rising till the day the candidacy of Gotabaya Rajapaksa was announced,” said MP Gunawardena.