The Colombo Stock Exchange and Securities and Exchange Commission are looking for regulatory fixes to legislative issues that are preventing the development of the capital market. Currently, the legal framework is preventing a more seamless market infrastructure from being in place.
CSE Board Director Jayantha Fernando noted that interested parties were looking for regulatory leeway to create better processes in the economy. The CSE has been able to bring about digital verification of persons through the new Electronic Transactions Act and through being in the good favor of the Commissioner-General of the Department for the Registration of Persons (DRP).
Fernando was speaking yesterday at Sri Lanka’s inaugural Internet Day held virtually. Previously the verification of identity would have cost Rs. 500 but through the implementation of a digital interfacing system at the DRP this cost has been brought down to Rs 25. Pricing remains at the discretion of the Commissioner-General of DRP.
Fernando noted how the strategy of digital reformers was to bring about procedural changes without needing significant changes to existing law. Reformers have been successful with the Electronic Transactions Act which has overriding legal principles that have been upheld by the courts.
There were many attempts in the past to bring about online client registration platforms but all had failed to significant legal impediments and a complex legal structure. Fernando said the Electronic Transactions Act of 2006 was recently brought to International Standards with reforms brought about a few years ago. Impediments to digitization can also take the form of regulatory pressure. Digitization advocates praised the Financial Intelligence Unit in the Central Bank for being flexible on certain issues.
The Central Bank is currently the only entity with an active secondary debt market. Primary Dealers and banks make considerable profits trading in government securities. Central Bank legislation on payments and settlements and other issues can have significant impacts on the existence of capital markets. The Central Bank has representatives on the Securities and Exchange Commission.
Digitization advocates are currently trying to bring about e-Know Your Customer and shared Know Your Customer documentation. By having shared platforms it would be easier to control the accuracy of data and also on-board clients to new digital services. Fernando noted that to date the Central Bank had been very helpful on the issue.
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