SEC pushes for infrastructure bonds, SOE listings to fund post-Ditwah rebuild

Chairman Senior Prof. Hareendra Dissabandara - Pic by Lasantha Kumara

• Plans introduction of digital assets to attract younger investors
• Flags unauthorised entities soliciting funds; complaints lodged with CID, FIU

The capital market regulator is in discussion with the Finance Ministry on mobilising long-term funding through infrastructure bonds to support large-scale reconstruction following Cyclone Ditwah, SEC Chairman Senior Prof. Hareendra Dissabandara said yesterday.

He said the Government’s limited fiscal resources had heightened the need to leverage capital market instruments to finance infrastructure rebuilding.

“The Government has limited resources to undertake reconstruction of infrastructure damaged by Cyclone Ditwah. I understand that restoring damaged railway tracks alone could cost around Rs. 200 billion,” he told a media briefing.

Prof. Dissabandara said the SEC and the Treasury were also examining the possibility of listing well-managed State-owned enterprises (SOEs) on the Colombo Stock Exchange (CSE) as part of broader efforts to deepen the market and expand funding channels for development.

He said the regulator was also planning to introduce digital asset-based products within the capital market framework to align with changing investor preferences, particularly among younger and more technology-oriented segments.

While digital currencies remain under the purview of the Central Bank of Sri Lanka, Prof. Dissabandara said the SEC was exploring the introduction of digital assets suitable for the country’s regulated capital market.

Digital assets in capital markets typically represent electronic versions of financial instruments such as equities, Bonds, or real estate, often enabled through distributed ledger technology. These instruments allow for faster settlement, improved transparency, and wider investor participation, distinct from Central Bank digital currencies.

Prof. Dissabandara also highlighted the persistently low level of public participation in the stock market, noting that less than 1% of Sri Lankans currently hold stock market accounts.

“There are only about 60,000 active CDS accounts in a market that has been operating for more than 100 years. This is clearly inadequate,” he said.

The SEC, he said, intends to introduce new investment instruments alongside public awareness initiatives to raise the proportion of citizens with CDS accounts to around 5% over the coming years.

He also pointed to the narrow base of listed companies on the CSE, despite the size of the domestic corporate sector.

“Although more than 200,000 companies are registered in Sri Lanka, only around 280 are listed on the stock exchange. This is a weak outcome. Our aim is to increase the number of listed companies to 500 within three years,” Prof. Dissabandara said, adding that sustaining higher economic growth, closer to 8%, would be necessary to support this expansion.

Meanwhile, SEC Deputy Director General Tushara Jayaratne said Sri Lanka’s market capitalisation stood at around 20% of GDP, well below regional peers such as Singapore, where market capitalisation reached 116.5% of GDP in 2024, and Hong Kong, where it exceeds 100%.

“We need more Government-linked companies and large corporates to enter the market if overall market capitalisation is to increase,” he said.

Separately, Jayaratne warned investors to remain vigilant against unauthorised entities attempting to solicit funds under the guise of share market investments.

He said the SEC has identified Blue Ocean Securities Ltd., and Gladius South Asia as entities involved in such activities and has lodged complaints with the Criminal Investigation Department (CID) and the Financial Intelligence Unit (FIU) of the Central Bank.

Blue Ocean, he said, had encouraged investors to route funds through a mobile application named ‘BOMate,’ which is not connected to the trading system of the CSE. Transactions made through the app fall outside the SEC’s surveillance framework, raising concerns over the destination of investor funds.

Jayaratne added that Gladius South Asia had falsely claimed to hold an SEC licence while encouraging investors to place funds in foreign markets.

Despite these incidents, he stressed that Sri Lanka’s capital market remains regulated and orderly. “The market is broadly fair and transparent, but investors also have a responsibility to exercise due diligence when making investment decisions,” he said.