Sri Lanka SEC chief meets CB Governor on EPF stock purchases, central counterparty
ECONOMYNEXT – Chairman of Sri Lanka’s Securities and Exchange Commission Viraj Dayaratne has met Central Bank Governor W D Lakshman for talks on Employee Provident Fund investments in stock and a central counterparty for clearing, the regulator said.
“This meeting provided an opportunity for the Governor and the Chairman to share and exchange views on issues of mutual interest as well as certain specific matters regarding which the SEC required the support of the Central bank,” the regulator said.
Dayaratne had explained that there had been a World Bank backed project to set up a central counter party mechanism (which cuts settlement risks) for all securities transactions but the central bank had limited it to forex and government securities.
“The Chairman explained the importance of including equity as well in the CCP…” the SEC said.
The CPP will enhance investor confidence and especially foreign investors, the SEC said.
The SEC had also discussed the prospects for the Employees Provident Fund, a pension fund of private sector employees managed by the state, to invest in stocks with ‘suitable due diligence.
“Such a move is expected to provide above average returns to members of the EPF and also would invigorate the capital market,” the SEC said.
Investments by the EPF in stocks had been controversial in the past, with investors who were stuck with some large parcels bought at high prices using it to exit. (Colombo/June15/2020-sb)