IOSCO highlights poor SEC regulatory powers in latest Country Review

Saturday, 8 July 2017 00:07 -     - {{hitsCtrl.values.hits}}

The Board of the International Organization of Securities Commissions (IOSCO), in its Country Review of Sri Lanka’s Securities and Exchange Commission (SEC), has highlighted poor regulation and called for its powers to be extended as a matter of priority. 

The Country Review is a detailed assessment of the depth and breadth of implementation of IOSCO’s Objectives and Principles of Securities Regulation (IOSCO Principles), the organisation said in a media statement.  

The Country Review identifies challenges that the SEC faces in meeting international regulatory standards relating to the design and operation of its regulatory framework.

“With respect to the framework´s design, the Country Review finds that the independence and regulatory remit of the regulator should be extended as a matter of priority. In addition, the framework needs further revisions to clarify the SEC’s powers (particularly enforcement and cooperation) and to set out clear and consistent guidance across all standards, which will apply to all relevant entities,” the statement said. 

Regarding the framework´s operation, the Country Review recommends risk-based supervision, staff development, raising standards for regulatory action as well as improving prosecutions, policy communication, emerging risk identification, internal audit processes and supervision of the audit profession.

The Country Review also sets out a roadmap to prioritise and implement these recommendations.

This is the third Country Review conducted by IOSCO’s Assessment Committee.

The Country Review identifies the progress of the Sri Lanka Securities and Exchange Commission (SEC) in implementing the IOSCO Principles and identifies areas in which improvements are needed.


The SEC and the Sri Lankan Government have recognised many of the shortcomings identified by the Country Review and have proposed measures to address several issues regarding design and operational matters. The SEC’s response to the Country Review findings was largely positive, acknowledging the significant persuasive value of the findings to support comprehensive capital market regulatory reform.

This Country Review was carried out by a Review Team of seven experts nominated by member organisations from Australia ASIC, India SEBI, the Netherlands AFM, Singapore MAS and Québec AMF, and the IOSCO General Secretariat. The Review Team leader was Steven Bardy of the Australian Securities and Investments Commission. The team members collectively brought a broad range of knowledge and practical expertise to the review exercise.

Created in 2012, the Assessment Committee also conducts Thematic Reviews of specific IOSCO Principles and Standards across IOSCO’s membership. The aim of these Thematic Reviews is to provide a snapshot of implementation of the IOSCO Principles and Standards and to help identify gaps, differences in approach and examples of good practice regarding implementation