SEC unveils 12-pillar plan to transform capital market

Friday, 26 September 2025 00:20 - - {{hitsCtrl.values.hits}}

The Securities and Exchange Commission of Sri Lanka (SEC) has launched its “12 Key Capital Market Development Projects – One Vision for a Resilient Market”, a reform agenda aimed at modernising the Colombo Stock Exchange (CSE), broadening products, and deepening investor participation.

The roadmap outlines 12 strategic initiatives that will serve as the backbone of capital market reforms over the next decade:

1. Demutualisation of the Colombo Stock Exchange – Transitioning the CSE into a company limited by shares to separate ownership and trading rights, improve governance, attract strategic investors, and enhance transparency.

2. Development of the Corporate Debt Market – Strengthening regulation and infrastructure for debt issuance to provide alternatives to bank financing and create long-term instruments for institutional investors.

3. Introduction of New Products – Expanding the product suite to include infrastructure bonds, perpetual bonds, sukuk, and GSS+ bonds (green, blue, social and sustainability-linked).

4. Expansion of Collective Investment Schemes – Strengthening unit trusts and fund-based vehicles as gateways for retail participation, especially from rural areas, with stronger regulation and fintech distribution.

5. Investor Education, Awareness and Training – Expanding education, professional training, and global collaborations to build an informed and engaged investor base.

6. New Listings (Public and Private) – Attracting private companies and SOEs to list on the exchange, broadening market depth, improving governance standards, and positioning the CSE for emerging market reclassification.

7. Attracting New Funds (Local and Foreign) – Diversifying capital inflows, increasing foreign institutional engagement, and promoting Sri Lanka’s investment profile internationally.

8. Central Counterparty (CCP) Mechanism – Implementing CSE Clear to guarantee settlement of trades, reduce counterparty risk, and pave the way for derivatives trading.

9. Establishing a Multi-Asset Class Derivatives Exchange – Creating a derivatives market covering futures, options, commodities and currencies to offer risk-management tools and attract global capital.

10. Strengthening the Regulatory Framework – Updating rules to align with international standards, protect investors, and enable innovation.

11. Digital Transformation of the Market – Leveraging AI, blockchain and end-to-end digitisation to modernise trading, clearing and reporting while ensuring cybersecurity.

12. Effective Risk Management Framework – Building systems to identify and mitigate systemic risks, strengthen resilience, and safeguard investor assets.

SEC Chairman Prof. Hareendra Dissabandara said the reforms are designed to “build a dynamic and resilient market that fosters long-term stability, ensuring sustainable prosperity for generations to come.”

The projects mark one of the most comprehensive capital market reform packages in Sri Lanka’s history, covering governance, new asset classes, digital infrastructure, and investor protection. Together they aim to raise market capitalisation relative to GDP, attract foreign funds, and position Colombo as a regional financial hub.