Sri Lanka should regulate investment banks, advisory services: IOSCO

ECONOMYNEXT – The global standard setter for securities regulation has urged Sri Lanka’s markets regulator, the Securities and Exchange Commission (SEC), to regulate investment banking and advisory services as a priority.

The Board of the International Organization of Securities Commissions (IOSCO) said the lack of regulation of such entities was a serious gap in current regulations.

Investment banks (including corporate finance advisers) and financial planners and advisers in Sri Lanka are currently not subject to any regulation, the IOSCO noted in its latest country review.

“Investment banks provide advice to corporates in respect of fundraising and listing matters – these are areas where there is a strong public interest element,” it said.

“At the other end of the spectrum, financial planners and advisers who normally deal with the general public present significant market conduct risks (e.g. providing poor quality advice, mis-selling, product pushing, etc.). The absence of direct regulation of these entities is a serious gap that requires urgent rectification.”

The recommendation was one of several made by the Board of the IOSCO in its Assessment Committee’s Country Review of Sri Lanka, released by the SEC, which noted that proposed revisions to the SEC Act are intended to address this concern.

“The activities of investment banks, financial planners and advisors, and the activities of employees of market intermediaries, are largely unregulated,” the review noted.

It said that proposed revisions to the SEC Act should be made and implemented “as a matter of priority”.

Revisions addressing investment banking, financial advice and planning activities are “particularly critical to building trust and confidence in both the SEC and the markets it regulates,” the IOSCO said.
(COLOMBO, July 11, 2017)





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