Sri Lanka aims for higher performance standards for asset managers

Colombo Stock Exchange Board

ECONOMNEXT – Sri Lanka’s capital markets regulator wants to enforce higher investment performance standards for asset managers, Securities and Exchange Commission (SEC) chairman Ranel Wijesinha said.

The initiative, in a tie up with the local arm of the Chartered Financial Analysts association, aims to better educate and protect investors, he told a forum.

The SEC wants to see capital market players progressing to higher standards, he said.

“For instance, there are certain brokers who are not complying with standards and are not technically competent,” Wijesinha said.

“If you believe, as a licensed stock broker you are unable to comply with the standards, you must give up your license,” he told the form held by the SEC and the Chartered Financial Analysts Society Sri Lanka, the local arm of the global association of investment professionals.

The SEC recently signed an agreement with the Chartered Financial Analysts Society Sri Lanka to work together to enhance professional standards within the capital market.

It aims to encourage more capital market players to adopt CFA Institute’s Global Investment Performance Standards, known as GIPS, and Asset Manager Code which could benefit both the fund managers and the investors.

According to the CFA Institute, these are ethical standards to ensure fair representation and full disclosure of an asset manager’s investment performance that also allow investors to make more accurate comparisons between competing asset managers.

Under these standards, firms are required to include all actual, fee-paying, discretionary portfolios in at least one composite defined by investment mandate, objective, or strategy to prevent cherry-picking their best performance.

The benefits for investors are greater transparency and rigorous commitment to ethical investment reporting.
(COLOMBO, 04 November 2019)

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