Markets

Sri Lanka’s SEC outlines future plans

Sunday March 19, 2017 10:16 am

ECONOMYNEXT – Sri Lanka’s Securities and Exchange Commision has outlined future plans involving new listing and regulation up to 2020.

The full statement is reproduced below:

SEC releases Capital Market Strategy 2020: a vision for capital market development in Sri Lanka

The Securities and Exchange Commission of Sri Lanka (SEC) releases the ‘Capital Market Strategy 2020’, a comprehensive transformative plan for Sri Lanka’s capital market, with the intention of providing strategic clarity to market participants and the general public.

The significance of ensuring the capital market’s resilience has become more apparent during recent years of sustained global economic and market uncertainty, divergent growth, volatility, and other emergent challenges. In this context, the Capital Market Strategy 2020 reflects the SEC’s definitive force of continuity in engendering competitiveness and effective regulation in our capital market.

Focused capital market development initiatives have historically accelerated economic growth and contributed to financial sector stability in emerging economies. Such initiatives proved critical to economic growth amongst regional signifiers including Vietnam, Thailand, Malaysia, Korea, India, and China and those outside the region including South Africa, Poland, Morocco, Hungary, and Brazil.

In Sri Lanka, capital market development as measured by market capitalisation as a percentage of gross domestic product is 25.3%. In contrast, from amongst the above contenders, South Africa, and, closer to home, Malaysia and India, reflect ratios of 234.0%, 129.3%, and 72.4% respectively.

The overview of the Capital Market Strategy 2020 below charts its core themes of establishing a robust and facilitative regulatory environment and fostering capital market development.

In shaping the Capital Market Strategy 2020, we are influenced by the need for regulatory strength and readiness and our ability to effectively deliver governance, enforcement and compliance. The current realities of capital markets necessitate an increasingly more proactive and responsive regulatory action. Further, due to the interconnectedness of markets and global nature, regulation assumes a more pervasive scope and requires progressive benchmarking against international best practice.

The developmental objectives focus on the several constraints characterising our market – its small size and scarcity of liquidity, limited diversification in product offering from an investor’s perspective, and in listing platforms from an issuer’s. Additionally, we consider the efficiency and commercial orientation of market institutions, market infrastructure and technology gaps, and community capacity building extending to both the institution and industry.

ESTABLISHING A ROBUST AND FACILITATIVE REGULATORY ENVIRONMENT

Strengthening Regulatory and Governance Environment

The amendment of the SEC Act is among the key initiatives geared towards strengthening the domestic regulatory and governance environment. The enhancement of the SEC regulatory framework and capabilities includes the strengthening of the governance standards of the SEC, providing for the establishment of a clearing house acting as a central counterparty (CCP), regulating demutualised exchanges, recognising new categories of market intermediaries, introducing a wide range of enforcement tools to deal with market misconduct, enhancing the accountability of all capital market participants, and encouraging early reporting to the SEC on possible market malpractice through provisions for whistleblower protection.

The passage of this Act would be pivotal to a series of incremental steps, beginning with Sri Lanka’s adherence to minimum international standards in capital market regulation and extending to an alignment of the domestic regulatory framework with international benchmarks. The SEC considers an enabling regulatory environment as being of foundational importance in creating a level playing field that instills trust and confidence among the varied market participants.

In 2016, the SEC extended an invitation to the International Organisation of Securities Commissions (IOSCO), the global standard-setter for securities market regulation, to conduct a Country Review of Sri Lanka. This was done with a view to assessing the present capital market regulatory framework, identifying gaps in compliance with 37 Principles of Securities Regulation and developing a roadmap for enhanced compliance.

The Country Review was preceded by a detailed self-assessment to facilitate timely completion within the first quarter of 2017 and would result in comprehensive reforms following the publication of its findings. Such reforms would include reviews of rules applicable to the capital market as well as measures to enhance investor protection, improve fairness and market efficiency, reduce systemic risk and global regulatory arbitrage, reduce the costs of conducting business across borders, and improve domestic regulatory capability. It is widely anticipated that such reforms would lay a solid foundation for the Sri Lankan capital market and improve its ability to garner the interest of domestic and foreign institutional portfolio investors.

Rules applicable to all regulatees of the SEC are currently undergoing review and revision with a view to creating a more robust regulatory environment for all and instilling greater discipline market-wide.

Further, the the domestic Corporate Governance Code applicable to listed companies is scheduled to be aligned with principles published by the Organisation for Economic Cooperation and Development (OECD), the international reference point for corporate governance regulation and implementation; thus improving the business integrity of listed companies.

Going forward, listed companies would also be encouraged to adopt integrated reporting, a framework that provides a holistic view of the corporate value creation process.

Increasing Accountability and Market Oversight

The SEC places significance on the procurement of a technologically advanced system for market surveillance and regulatory reporting to ensure that transactions are carried out in compliance with the rules governing capital market activity. Such a system would enable the SEC to detect and deter potential market abuse and enhance its ability to pre-empt the occurrence of disruptions in the market as a result of irregular trading activity. It is also proposed to cast duties on supplementary service providers including those hitherto unregulated by the SEC. This is to ensure that such persons remain accountable for the scope and quality of work performed in relation to the capital market. The SEC also hopes to extend its regulatory reach to encompass other hitherto-unregulated entities and instruments. Raising the Standards and Competencies of Capital Market Participants

The Capital Market Strategy 2020 proposes to enhance and maintain high levels of professionalism among persons engaged in capital market activity by enhancing the guidelines on fitness and propriety applicable to market institutions and market intermediaries. At the same time, it is envisaged that the qualification framework of the SEC would undergo extensive revision, allowing for multi-tier licensing and continuous professional development

These new guidelines would drive a positive industry culture encouraging honesty and integrity among the regulatees of the SEC so as to better protect the investing public.

Mitigating and Managing Systemic Risk

In order to better evaluate and address systemic risk, the SEC intends to adopt a risk-weighted capital adequacy framework for capital market institutions and intermediaries. This initiative is now underway, following the recent issue of Directives by the SEC stipulating risk-based capital adequacy requirements and the minimum shareholders’ funds requirement applicable to stock brokers. The development of a risk-based assessment framework for on-site supervision by the SEC would follow. Once such a framework is developed, SEC would conduct inspections of its regulatees in relation to their relative risk profiles and systemic importance.

Prevailing post-trade risks including asset commitment risk and counterparty risk would be effectively addressed, and financial stability improved upon, through the phased implementation of a CCP. The SEC directs the course of the sequential approach, prioritising the implementation of Delivery vs. Payment for settlement and the adoption of Value at Risk based margining (VaR) to mitigate post-trade risk. Extensive consultation with specialists and the industry has led to the determination of both the margining and settlement framework in detail. The SEC would be creating an enabling legal framework in line with acceptable international benchmarks to enable post trade risk management and related initiatives including the introduction of securities borrowing and lending.

FOSTERING CAPITAL MARKET DEVELOPMENT

Creating an enabling environment for capital formation

The SEC envisions a vibrant capital market attracting strong issuer participation from both the private sector and State-owned Enterprises (SOEs) as a preferred source of long-term fundraising. Representations have been made to the Government of Sri Lanka in exploring the potentiality of invigorating the capital market through the listing of SOEs with compelling investment propositions. Entry by SOEs into the capital market engenders less dependence on State financing whilst enhancing governance standards. The CSE is encouraged to engage with private sector corporates in order to facilitate their efforts to tap the capital market to fulfill funding requirements.

The implementation of new listing platforms for issuers of varied size, scale, maturity, and value-recognition needs is underway collaboratively with the CSE. The Multi Currency Board would enable local and foreign issuers to explore multi currency listings, whilst small and medium enterprises (SMEs) would be provided access via the SME Board. The SEC along with the CSE is also keen to improve the efficiency and cost-effectiveness of the equity fundraising process through both operational and technological enhancements.

Creating a robust bond market is a significant component of the Capital Market Strategy 2020. SEC-led collaborative representations in recent years secured tax concessions supporting bond market issuances. As a result, inflows to the primary debt market reached an all-time high in 2015, with Rs. 83.4 Bn being raised through debt IPOs.

Other strategies related to the debt capital market also include the streamlining of the bond IPO process, infrastructural enhancements to support enhanced secondary market activity, and stewardship of joint stakeholder engagements to facilitate liquidity. Collectively, the initiatives aim to enhance the competitiveness of the debt market as a source of financing in a market which traditionally relies on equity.

Deepening liquidity and broad-basing market participation

The Capital Market Strategy 2020 aims to establish the capital market as a preferred investment choice by a broad range of investors. As an important conduit and enabler of retail investment, unit trusts are pivotal to this strategy. The SEC works towards supporting the unit trust industry by cultivating a conducive environment and creating awareness among the general public in order to ensure that a wider segment of society can reap the medium to long-term benefits and rewards of investing in the capital market through unit trust investments.

The SEC seeks to actively engage provident funds and pension funds in diversifying their portfolios and increasing asset allocation to capital market investments. Increased participation by such long-term institutional investors can improve market stability and sustainability, as a result of their holding power and ability to act in a counter-cyclical manner. Traditionally having significant exposure to government securities, these funds could optimise portfolio returns and extend maturity profiles to provide better asset-liability matching through calculated investment in the market.

At present, with the broad-basing of market participation in mind, minimum public holding thresholds apply to listed companies upon initial listing, and enforced thereafter on a continuous basis. The SEC would drive requisite policy formulation for the introduction of short-selling, securities borrowing and lending, and other new products in order to deepen liquidity.

Developing infrastructure and enabling new products

Technological readiness, responsiveness and stability are material strategic considerations for market institutions and market participants. Headway has been made in this regard with the SEC driving the implementation of a common stock broker back office and customised order management systems in conjunction with the CSE. Resulting in operational efficiency and streamlining of the trade-through-settlement value chain, the initiative sets the infrastructural foundation for the proposed phased implementation of a CCP. The implementation process constitutes modification of and additions to systems and processes industry-wide, particularly by redefining the CSE’s market infrastructure at world-class level.

To increase portfolio choice of investors, the SEC is developing a sequencing framework for the introduction of new products ranging from Real Estate Investment Trusts (REITs) and Exchange Traded Funds (ETFs) to Financial Derivatives. The SEC would enable the introduction of a multi-asset offering for investors by spearheading policy formulation in order to facilitate related rule making by the CSE. .

Building domestic capabilities

The SEC will facilitate comprehensive community capacity building. Institutional competencies of the SEC are to be enhanced through measures to recruit and retain a proficient workforce. Industry capacity-building focuses on enhancing the financial literacy and capital market expertise of all stakeholders in relation to the capital market, and continuous investor education and public awareness-raising to equip investors with the knowledge required to make informed investment decisions.

The proposed demutualisation of the CSE is a central initiative of building domestic capability through the re-orientation of the CSE to pursue strategic and commercial interests. Demutualisation segregates ownership and management of the CSE in order to adequately represent the interests of all capital market stakeholders. The CSE’s business model would be reviewed in the process to optimise financial sustainability. Institutional competence and global acceptability of the CSE is expected to be enhanced through demutualisation, the modality of which is currently being finalised.

LOOKING FORWARD

Over the medium to long term, far-reaching reforms proposed as part of the Capital Market Strategy 2020 would support the proposition to Morgan Stanley Capital International (MSCI) to reclassify Sri Lanka as an emerging market, providing for broader visibility as an attractive portfolio investment destination.

Implementation

The expansive scope of the Capital Market Strategy 2020 necessitates prioritisation, with goals ranging from immediate to medium and long term. With the intent of increasing transparency, significant milestones would be communicated to the public over the implementation horizon.

Broad market and public consultation outreach would be in effect during the implementation. Public consultations were conducted in January 2017 in view of the proposed SEC Act and the proposed Guidelines on Fitness and Propriety for Stock Brokers, while an industry consultation on the proposed Advertising Guidelines for Unit Trusts was conducted in November 2016. Further consultation can be expected as other development initiatives progress.

We recognise that in order to implement the initiatives under consideration, the SEC would need to align multiple stakeholders with divergent interests towards universal goals. While the auspices of the Government of Sri Lanka has been secured for the Capital Market Strategy 2020, its successful implementation also anticipates collaborative and complementary alliances with regulators, supranational organisations, market institutions, market participants, and industry associations.

The SEC, in redefining the competitive position of the market, is committed to aligning its role as a responsive market regulator with the significant opportunities present before it.

FILED UNDER: 2020 strategy,SEC,Sri Lanka

Constitutional Amendments

Sri Lanka budget ignores provincial polls while stripping council powers: MP

Friday November 13, 2026 6:35 pm

ECONOMYNEXT – A Sri Lankan opposition legislator has criticized the government’s 2027 budget speech for failing to mention or allocate provisions for long-delayed Provincial Council elections, while accusing the administration of stripping away devolved powers.

“Previous governments had a policy on their policy statement: they would mention the Provincial Council elections,” Illankai Tamil Arasu Kachchi (ITAK) MP Shanakiyan Rasamanickam told parliament during the budget debate.

“Not a single word about the Provincial Council election! About the Provincial elections, you haven’t mentioned a word, but what have you mentioned? You are taking away the powers of the Provincial Council.”

Rasamanickam pointed out that the government was taking over six provincial hospitals — Mullaitivu, Mannar, Kilinochchi, Vavuniya, Avissawella, and Gampaha — while continuing to delay the polls.

The 2027 national budget presented by President Anura Kumara Dissanayake proposed to transfer to
the central Government the District General Hospitals of Mannar, Mullaitivu, Vavuniya, Kilinochchi, Gampaha and Avissawella, which are administered by the Provincial Councils, out of the 20 District General Hospitals.

“You are taking away power that was given to the Provincial Council, whilst not having Provincial Council elections,” he said.

“Last year, powers given to the provinces regarding environmental policies — you’ve taken it back, with no consent of the Provincial Council.”

He also criticized the budget speech for making no mention of land release issues in the North and East, a new constitution, or the government’s pledge to abolish the executive presidency.

“In this budget, I must also mention, not only the Provincial Council election, about the new constitution — not a single word about the constitution! What is happening to your plans and proposals of abolishing the executive presidency? Where is the new constitution?” Rasamanickam questioned.

The legislator further raised concerns over proposed legislation, including the Protection of the State from Terrorism Act (PSTA) and the Organized Crime Bill, arguing they were more repressive than the existing Prevention of Terrorism Act (PTA) they are meant to replace.

“The trajectory of this government is worrying to me. It’s really worrying to me,” Rasamanickam said.
“Because if the objective is to say that there is no Tamil national question, if the objective is to say that you all have resolved any ethnic issue that this country faced, then I think the Tamil people will teach this government a very, very, very harsh lesson in the future.” (Colombo/Nov13/2026)

Markets

Sri Lanka stocks close down 0.60-pct, dragged by HNB and LOLC

Friday November 13, 2026 3:28 pm

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Friday, CSE data showed, with the benchmark All Share Price Index moving down 0.60 percent.

The ASPI was down 133.22 points at 22,024.18, while the more liquid S&P SL20 was down 1.06 percent, or 67.55 points, at 6,298.02.

The ASPI ended the week up 784.53 points from last Friday.

Positive contributors to the ASPI were Dialog Axiata (up 0.40 percent at 50.20 rupees), Distilleries Company of Sri Lanka (up 0.52 percent at 58.30 rupees), Aitken Spence (up 3.60 percent at 151.00 rupees), Ceylon Tobacco Company (up 1.05 percent at 1,828.50 rupees), and LOLC Finance (up 1.96 percent at 5.20 rupees).

Hatton National Bank (down 1.88 percent at 403.75 rupees), Richard Pieris and Company (down 6.21 percent at 27.20 rupees), LOLC Holdings (down 2.17 percent at 405.00 rupees), Sampath Bank (down 1.91 percent at 154.00 rupees), and Singer (Sri Lanka) (down 2.40 percent at 77.30 rupees) were top negative contributors.

Market turnover was 3.23 billion rupees. Capital goods led turnover with 869.21 million rupees. (Colombo/Nov13/2026)

Economy

Sri Lanka MP slams budget speech for omitting Tamil national question

Friday November 13, 2026 2:56 pm

ECONOMYNEXT – A Sri Lanka legislator has voiced strong disappointment that the President’s budget speech failed to make a single mention of the Tamil national question.

“It is very unfortunate that in His Excellency the President’s speech, there has not been a single word mentioned about the Tamil national question. Not a single word,” Shanakiyan Rasamanickam said.

“A budget speech generally, is a policy direction of the government for the next year. The budget speech is not only a statement of the country’s fiscal position or the economy’s position. It is the country’s, the government’s, plan, or what the government plans to do the following year. That’s a policy statement.”

Former presidents would at least mention the Tamil question even if it was not resolved, he said.

Former President Ranil Wickremesinghe in his speech, in his policy statement, he would mention: “The Tamil national question must be resolved,” Rasamanickam said.

Former Presidents Maithripala Sirisena and Gotabaya Rajapaksa also mentioned that the national ethnic question must be resolved, he added.

“Every President, every country’s Head of State, in their policy statements, have acknowledged the fact that there is an unresolved national issue, the Tamil national question, that it needs to be resolved. Various governments have proposed various mechanisms; none of them have succeeded, but at least it was mentioned.”

This year’s budget made allocations for the Office of Missing Persons, and the Office of Reparations.

“But the domestic mechanism is a mechanism that the victim community has rejected. So you all are allocating money to a mechanism where the victim community is not going to be part of.”

Last year’s budget 1 billion was allocated to be spent on the Trincomalee and Jaffna airports.

“Where was that 1 billion for the Trincomalee and Jaffna airports spent last year?”

“The trajectory of this government, Honourable Deputy Speaker, is worrying to me. It’s really worrying to me. Because if the objective is to say that there is no Tamil national question, if the objective is to say that you all have resolved any ethnic issue that this country faced, then Honourable Deputy Speaker, then I think the Tamil people will teach this government a very, very, very harsh lesson in the future.” (Colombo/Nov13/2026)

Bonds & Forex

Sri Lanka sells extra Rs6.5bn Treasury bills after auction

Friday November 13, 2026 12:32 pm

ECONOMYNEXT – Sri Lanka has sold 6,500 million rupees of treasury bills offered on tap at an average rate of 9.95 percent, the public debt management office said, bringing the total of bills sold in the week to 85.562 billion rupees.

The issue offered 90 billion.

Total market subscription was 6.5 billion rupees.

The debt office sold a 12-month bill at 9.95 percent.

On Wednesday (11) the debt office raised 79 billion rupees of 3, 6 and 12 month bills after offering 90 billion.

The settlement date is November 13. (Colombo/Nov13/2026)

Construction and Real Estate

Access Engineering Sept quarter group net profit surges 200-pct to Rs4.75bn

Friday November 13, 2026 12:15 pm

ECONOMYNEXT — Sri Lanka’s Access Engineering PLC recorded a group net profit attributable to equity holders of Rs. 4.75 billion for the quarter ended September 30, surging 200 percent from Rs. 1.58 billion a year earlier, interim accounts showed.

Basic earnings per share rose to Rs. 4.08 for the September quarter, up from Rs. 1.58 previously.

Quarterly group revenue expanded 36 percent to Rs. 20.39 billion from Rs. 14.94 billion, underpinned by condominium property handovers — reflected in inventories dropping Rs. 7.69 billion since March to Rs. 35.71 billion — alongside strong automobile sales and steady civil engineering execution.

Cost of sales rose at a slower 27 percent to Rs. 14.34 billion, lifting gross profit by 64 percent to Rs. 6.05 billion and expanding gross margins to 29.7 percent from 24.7 percent.

Other income jumped 144 percent to Rs. 259.9 million, while administrative expenses rose 75 percent to Rs. 1.14 billion, leaving operating profit up 64 percent at Rs. 5.16 billion.

However, finance costs more than doubled, rising 107 percent to Rs. 1.18 billion on elevated group borrowings of Rs. 43.74 billion, partly offset by finance income climbing 302 percent to Rs. 42.2 million.

Share of results from equity-accounted investees rose 122 percent to Rs. 26.7 million, pushing pre-tax profit up 56 percent to Rs. 4.05 billion.

Income tax swung to a net reversal of Rs. 186.6 million from an expense of Rs. 804.1 million, boosted by deferred tax assets on unrelieved losses from a 100 percent enhanced capital allowance claimed by 60 percent-owned radiopharmaceutical subsidiary Access Medical Tracers (Private) Limited.

Total period profit rose 136 percent to Rs. 4.24 billion, with non-controlling interest declining 24 percent to Rs. 164.9 million following last year’s buyout of minority shareholders in Harbour Village (Private) Limited.

No separate exchange gain or loss was itemized in quarterly earnings, though foreign currency translation via associates recorded a Rs. 17.4 million loss in other comprehensive income, alongside USD 16.6 million in corporate guarantees.

Notes also flagged an expected Rs. 1.45 billion recovery from the terminated South Asia Commercial and Logistics Hub project, a Rs. 225 million post-quarter legal settlement already provided for, and a Supreme Court appeal over a 2011/12 PAYE tax ruling.

Group assets stood at Rs. 132.4 billion as of September 30, with net asset value per share at Rs. 46.70, as the Employees’ Provident Fund raised its stake to 5.69 percent.

Access Engineering shares closed at 80.00 rupees at the end of September and are currently trading around 85.80 rupees. (Colombo/Nov13/2026)

Economy

Sri Lanka private sector says timely implementation of Budget 2027 key

Friday November 13, 2026 11:43 am

ECONOMYNEXT – Private sector body, The Ceylon Chamber of Commerce, said it was encouraged by the broad direction of Budget 2027, noting that it reinforces Sri Lanka’s commitment to economic transformation while maintaining policy continuity, macroeconomic stability, and fiscal discipline.

“This continuity is particularly important as the country seeks to transition from economic stabilisation to a more durable, investment-led growth trajectory.”

The chamber also noted several areas where the Budget could have placed greater emphasis to strengthen the country’s growth prospects.

“In particular, there is a need for a stronger focus on attracting Foreign Direct Investment (FDI), accelerating factor market reforms, particularly in land and labour, and fast-tracking public procurement reforms to improve the efficiency and speed of project implementation.

“More targeted and actionable proposals could have been introduced to unlock the potential of sectors with significant growth opportunities, including tourism, agriculture, IT/BPO and logistics.”

The chamber said the budget contains positive measures aimed at enhancing competitiveness, and external sector resilience, while presenting opportunities for focus on sectors that can accelerate growth.

“A number of the key structural reforms identified in last year’s Budget have been carried forward and strengthened, providing greater certainty and predictability to businesses and investors.

“These include the continued implementation of the Trade National Single Window (TNSW), the phased removal of para-tariffs, the rollout of the Digital ID framework, efforts to expand market access through new Free Trade Agreements (FTAs), the strengthening of one-stop-shop investment facilitation mechanisms, progress on Customs reforms, the expansion of Bandaranaike International Airport (BIA), enhanced financing support for SMEs, and reforms relating to the management of State-Owned Enterprises.”

The CCC said that more than 20 proposals submitted by it have been reflected in Budget 2027.

These include measures to strengthen investor facilitation through the establishment of a professionally managed investment promotion agency; continued efforts to improve trade facilitation and export competitiveness; the Government’s consideration of a successor programme with the International Monetary Fund (IMF); accelerated progress on key legislative reforms; the expansion of digital government services; and the promotion of cashless payments and broader digital adoption. The Budget has also captured several priorities relating to energy security, including the accelerated deployment of Battery Energy Storage Systems (BESS) and investments in fuel storage infrastructure, initiatives to optimize underutilized agricultural land, measures to support the expansion of the digital economy and the IT/BPO sector, and tax reforms to support exporters, including the acceptance of newly VAT-registered exporters as eligible exporters.

“The inclusion of these priorities reflects the value of sustained public-private dialogue and demonstrates increasing alignment between national policy objectives and the needs of a competitive, export-oriented economy.

“The priority now must be effective and timely implementation to translate policy commitments into investment, competitiveness, exports and sustainable growth.” (Colombo/Nov13/2026)