Good governance activist Chandra Jayaratne has written to the Securities and Exchange Commission (SEC) Chairman pointing to the oversight accountability of the SEC regarding Government Bond issues and related secondary market transactions. Here are excerpts of the letter which has been copied to media:
I have detailed in the Annexure, some extracts of the information published in the web site of the SEC and some sections of the Securities and Exchange Commission of Sri Lanka Act.
A review of the said information, prima facie, appears to indicate that the oversight accountability of the SEC extends to the entirety of the Securities Market, including Bonds issued by the Government and covers the operation of both the primary and secondary markets as demonstrated by the following;
nthe creation and maintenance of a market in which securities can be issued and traded in an orderly and fair manner;
nthe protection of the interest of investors;
nthe regulation of the securities market and to ensure that professional standards are maintained in such market.
In the light of the above presumptive oversight accountability, I wish to share with you some recent correspondence with the Monetary Board of Sri Lanka and the President Maithripala Sirisena.
I earnestly appeal to you, in the interest of the state and citizens, to consider extending the oversight responsibility of the SEC to encompass the Government Bond issues and their associated secondary market transactions.
“Effective regulation lays the foundation for investor confidence, supports efficient functioning of the capital market and thereby builds the platform for economic growth. We attempt to ensure that our regulatory environment is relevant and effective and that our Securities law is tailored to meet the needs of the market and international best practices.” (An extract from the website)
Extracts from Securities and Exchange Commission of Sri Lanka Act no. 36 of 1987 as Amended by act no. 26 of 1991, act no. 18 of 2003 and act No. 47 of 2009
Part II - Objects, Powers and Functions
Objects of the Commission -[ § 7, 26 of 1991] [§3, 18 of 2003]
12. The objects of the Commission shall be-
(a) the creation and maintenance of a market in which securities can be
issued and traded in an orderly and fair manner;
(b) the protection of the interest of investors;
(c) the operation of a Compensation Fund to protect investors from financial loss arising as a result of any licensed stock broker or licensed stock dealer being found incapable of meeting his contractual obligations; and
(d) the regulation of the securities market and to ensure that professional
standards are maintained in such market.
[4, 47 of 2009]
“Securities” means debentures, stocks, shares, funds, bonds, derivatives inclusive of futures and options, whatever the nature of the underlying asset relied on or notes issued, or proposed to be issued, by any Government or of any body, whether corporate or unincorporated, including any rights, options or interests (whether described as units or otherwise) therein or in respect thereof or any other instruments commonly known as securities, but does not include bills of exchange or promissory notes or certificate of deposits issued by a bank;