COLOMBO (EconomyNext) – Regional capital markets should align their domestic regulations and market infrastructure with globally accepted standards and practices to facilitate cross border transactions, a senior Sri Lankan regulator said.
Robust capital markets in the region can provide various sources of financing to support the growth of the real economy, said Vajira Wijegunawardane, Director General of the Securities and Exchange Commission of Sri Lanka (SEC).
Such markets can be built by strengthening regional cross-border regulatory cooperation and by implementing effective regulations and enhancing market infrastructures, he told a training Seminar of the Asia- Pacific Central Depository Group (ACG) in Colombo.
“Markets in the region are diverse in size and are in different stages of development,” Wijegunawardane said.
These differences may impede cross border trading from taking place effectively, he told the forum organised by Sri Lanka’s Central Depository Systems.
“Therefore as an initial step towards facilitating cross border trades we believe the regional markets should at least aspire to align their domestic regulations as well as market infrastructure with globally accepted standards and practices.”
Wijegunawardane said financial market infrastructures are key components of the financial system.
They comprise of a set of rules processes and operational arrangements for managing the inherent risks arising from transactions between market participants.
“Any disruptions to market infrastructure will not only erode investor confidence and threaten financial stability but lead to financial contagion,” he said according to the text of his speech released by the SEC.
“It is in this context that regulators have recognized the need to ensure that financial market infrastructure that gives rise to systemic risk must be robust as possible and capable of withstanding any financial storm.”