Following is the text of the letter written by good governance activist Chandra Jayaratne to Chairman of the Committee on Public Enterprises (COPE) D.E.W. Gunasekera with regard to the Securities and Exchange Commission and capital markets.
14th August 2012.
Hon. D.E.W. Gunasekera M.P.
The priority need for the ‘Voice of and Effective Response Actions by the COPE’
Following the review of the Securities Exchange Commission and its regulatory operations
I address this note to you with much respect for and high expectations from your leadership of COPE, in the context of mixed feelings of happiness and sadness in reading the news reports published since the recent COPE review of the Securities Exchange Commission and its regulatory operations.
I am happy that living up to public expectations of COPE, you have initialled a review of the Securities Exchange Commission and its regulatory operations. I fully support your directing the said review and expanding its scope to go beyond the narrow confines of an oversight of the financial performance of independent regulators in order to ensure their observance of financial discipline in their operations.
I believe that so long as such reviews do not impinge on the operational independence and not directive in nature and are conducted within a framework of serving a role similar to that assigned to an audit committee; it will serve the interests of all stakeholders, including the state as well as the regulatory body concerned.
I am however deeply saddened by the continuing pressure and external interference on the Chairman and Board of Directors of the Securities Exchange Commission, as reported in the news media, especially at a time there are initiatives led by the Chairman to have in place effective and best practice regulations which will ensure a stable, sustainable and professional securities market and will assure long term growth and rewards to all stakeholders.
I believe that the role of the COPE must extend to ensuring that operational freedom, independence, international best practice embedded operating rules and regulations and unrestricted enforcement capability are in place for the Chairman, the Board and the professional management team to effectively discharge their accountability and meet the agreed long term vision and mission, within agreed framework of Core Values and Ethics.
It is only in such an operating environment as described above, that necessary reforms, effective regulations, operating rules with effective governance and enforcement will be possible, meeting long term goals and satisfying stakeholder expectations.
I wish to draw your kind attention to my letter of 22 July 2012, supporting the decision of the Securities Exchange Commission to institute a regulatory framework which requires IPO Grading and Independent Equity Research. I wish in addition to draw your particular attention to the reforms involving specific amendments to the eligibility requirements for listing of equities on the CSE as suggested therein.
Only a Chairman and Board, with the full support and endorsement of all stakeholders, duly empowered by the State and effectively supported by those in leadership positions in the Executive, and allowed to exercise with due accountability independence and professionalism in the development of regulation embedded with international best practices duly tailored to our particular circumstances and the enforcement of such regulations, will ensure stable, sustainable and growing securities market.
I therefore appeal to you, through COPE with the due endorsement of the Legislature to publicly air the “Voice of the Legislators” unreservedly, supporting the urgent and priority need for the securities market regulators to be empowered by all stakeholders, and duly empowered by the State and those in leadership positions in the Executive, and enabled to exercise their independence and professionalism in the development of regulation and enforcement thereof.
I trust that this appeal and request for priority response action will receive your due attention and that your initiatives will be duly endorsed and further supported by those persons copied on this letter
H.E the President and Hon Minister of Finance & Planning,
Speaker of Parliament,
Leader of the House,
Leader of the Opposition,
Secretary to H.E. the President,
Secretary to the Treasury,
Governor of the Central Bank,
Chairman, Securities Exchange Commission,
Chairman, Colombo Stock Exchange,
President Institute of Directors,
President, Institute of Chartered Accountants of Sri Lanka,
President, Chartered Financial Analysts Association,
President, Chartered Institute of Secretaries,
Chairman, Ceylon Chamber of Commerce,
Chairman, Colombo Stock Brokers Association,
Editors of the financial and business media – For publication