Overregulation must be avoided: Ex SEC Chief

By Himal Kotelawala

Stressing that a complete overhaul of the Securities Exchange Commission (SEC) Act was long overdue and lauding the proposed Securities Exchange Bill for a number of its more salient features, former SEC Director-General and Chairman Dr. Dayanath Jayasuriya on Tuesday cautioned against moving towards an environment of overregulation.

Delivering an hour-long presentation on the implications of the new Bill which is to be taken up in Parliament on 26 January, Dr. Jayasuriya noted the draft bill addresses many gaps and offers clarity with regard to certain matters and also casts a very wide net to capture all market participants.  Regulations, rules and directives will further shed light on how the Bill, once enacted, will be enforced, he said. “Certain clauses envisage considerable resources and technical skills which even developed securities markets jurisdictions often find difficult to enforce. From under-regulation, we should avoid moving rapidly towards overregulation,” he said.

Advocating a balance between these two states, Dr. Jayasuriya said until that right balance was struck, a path studded with pitfalls would necessarily need to be followed.

“Corporate entities, the community of market players and the public must make every genuine endeavour to facilitate the enforcement of this important new piece of legislation so that Sri Lanka can have a truly vibrant and transparent securities market,” he said.

As different parts can be brought into operation on different dates, he went on to say there is a window of opportunity for the regulatory structure as well as technical skills of the SEC staff to be gradually developed.

There needs to be greater clarity with regard to some of these problem areas but they can be rectified when the Bill is being debated in Parliament, he subsequently told the Daily FT.