Front Matter

Front Matter Page

IMF Country Report No. 19/140

SRI LANKA

TECHNICAL ASSISTANCE REPORT—ENHANCING THE EFFECTIVENESS OF THE SRI LANKAN SECURITIES MARKET ENFORCEMENT PROGRAM

May 2019

This Technical Assistance report on Sri Lanka was prepared by a staff team of the International Monetary Fund It is based on the information available at the time it was completed on October 2017.

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© 2019 International Monetary Fund

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INTERNATIONAL MONETARY FUND

Monetary and Capital Markets Department

Sri Lanka

Enhancing the Effectiveness of the Sri Lankan Securities Market Enforcement Program

Phyllis Cela and Matthew Britton (MCM Experts) April 2018

The contents of this report constitute technical advice provided by the staff of the International Monetary Fund (IMF) to the SEC of Sri Lanka (the “TA recipient”) in response to their request for technical assistance. This report (in whole or in part) or summaries thereof may be disclosed by the IMF to IMF Executive Directors and members of their staff, as well as to other agencies or instrumentalities of the TA recipient, and upon their request, to World Bank staff and other technical assistance providers and donors with legitimate interest, unless the TA recipient specifically objects to such disclosure (see Operational Guidelines for the Dissemination of Technical Assistance Information—http://0-www-imf-org.library.svsu.edu/external/np/pp/eng/2013/061013.pdf). Disclosure of this report (in whole or in part) or summaries thereof to parties outside the IMF other than agencies or instrumentalities of the TA recipient, World Bank staff, other technical assistance providers and donors with legitimate interest shall require the explicit consent of the TA recipient and the IMF’s Monetary and Capital Markets Department.

Contents

  • Glossary

  • Preface

  • Executive Summary

  • I. Background

  • II. Findings

    • A. SEC Enforcement Program Structure

    • B. SEC Investigation Process

    • C. SEC Initiatives to Address Recommendations of the World Bank FSAP and IOSCO RT

  • III. Recommendation

    • A. Streamline the Enforcement Program

    • B. Adaptation of Criteria for Prioritizing Investigations/Cases

    • C. Accountability Management System

    • D. Publication of the Results of Enforcement Actions, Policies, and Procedures

    • E. Metrics to Measure the Effectiveness/Credible Deterrence of the Enforcement Program

  • Table

  • 1. Summary of Key Recommendations

  • Figure

  • 1. Surveillance, Investigations, and Enforcement Process Flowchart

  • Box

  • 1. Summary of IOSCO Findings

  • Appendix

  • I. Improvements Made in the Last Two Years based on the World Bank FSAP and IOSCO RT

Glossary

CD Report

IOSCO’s Paper: “Credible Deterrence in the Enforcement of Securities Regulation”

CSE

Colombo Stock Exchange

FSAP

Financial Sector Assessment Program

IMF

International Monetary Fund

IOSCO

International Organization of Securities Commissions

MCM

Monetary and Capital Markets Department

MMoU

Multilateral Memorandum of Understanding

MSCI

Morgan Stanley Capital International

IOSCO RT

IOSCO Review Team

SEA

Draft Securities Exchange Act

SEC

Sri Lanka Securities and Exchange Commission

SEC Act

Sri Lanka Securities and Exchange Commission Act

Preface

At the request of the Democratic Socialist Republic of Sri Lanka’s Securities and Exchange Commission (SEC), a Monetary and Capital Markets (MCM) mission visited Colombo during October 3–10, 2017 to assist the SEC in enhancing the effectiveness of its enforcement program. The mission comprised Ms. Phyllis Cela and Mr. Matthew Britton (MCM experts). MCM staff (Nobuyasu Sugimoto, Financial Supervision and Regulation Division) provided supervision of the mission work.

The mission met with the SEC Chairman, the Director General, relevant Division Directors and staff, members of the Attorney General’s Department staff, members of the Colombo Stock Exchange staff, and a member of the legal fraternity. The mission wishes to express its appreciation to the management and staff of the SEC for their gracious hospitality, cooperation and assistance.

Sri Lanka: Technical Assistance Report-Enhancing the Effectiveness of the Sri Lankan Securities Market Enforcement Program
Author: International Monetary Fund. Monetary and Capital Markets Department