Director General

Director General of the SEC


The year 2023, has been a year of transition for the country. Sri Lanka started gradually recovering from its worst economic crisis during the year. In March 2023, the International Monetary Fund (IMF) approved a USD 2.9 billion bailout in a four-year program to restore the economic stability. However, Sri Lanka’s path to economic recovery was fraught with enormous challenges in 2023. The year highlighted the value of making dedicated, transparent and strategic choices. In fact, to live up to the challenge and overcome this financial and economic predicament, it became critically important to understand what reforms were needed and how they could be carried out The needed reforms included strengthening public financial management, enhancing domestic resource mobilisation, improving the performance of SOEs to reduce their fiscal burden, and encouraging private sector activities through harmonising trade and investment activities. Nevertheless, the inordinate delay in implementing economic reforms was the issue in the year 2023. For instance, delaying SOE restructuring processes became dangerous as it created a heavy fiscal burden with significant macroeconomic implications to the public.

Sri Lanka can learn from successful reform programs in other countries, that aimed to attain economic growth and stability by reducing the public sector size, enhancing efficiency and productivity, and promoting competition. This shift allows the Government to fully concentrate on facilitating and regulating economic activities rather than directly providing goods and services. It reduces the financial and administrative burden of the Government.

In that context the Capital Market is the globally accepted platform for raising long- term capital funds for business entities compared to banks. Further, the Capital Market provides opportunities for businesses to attract strategic and other types of investors through the listing process. By listing on the stock exchange these SOEs will be able to improve their internal governance, operating efficiencies and attract foreign and local investor capital.

In that context, The SEC and the CSE gave due consideration to the current levels of governance, organisation structure and operational challenges prevailing in the SOE sector and created a separate Listing Board and listing rules with a view to enabling SOEs to progressively transition from what they are now to what they should be. However, the SOEs are yet to make use of this avenue. By now it is quite clear that the only way for Sri Lanka to recover from the present economic crisis is through a substantial economic growth rate in the range of 5% to 7% or more for in the next 10 years or so. However, from the numbers we see today, the economy is not expected to grow at a substantial rate in the coming years and the economy will remain in an extremely fragile and precarious position. In such a scenario, the capital market can be the catalyst of change if properly utilised.

For instance, in driving the recovery of Sri Lanka’s economy, dollar earning listed companies can play a significant role. In that sense, it is time to pick the winners from our export oriented dollar earning listed companies by looking at their potential, drive and commitment. Therefore, we need to incentivise and nurture such winners and free such winning companies to go out and compete with global giants to make headway in economic development, which would change the whole appearance of our country; it will convert us to a dynamic entrepreneurial state and will help the country to realise its true potential.

Nevertheless, it is no question that all groups must support well-structured, substantive economic reforms that are being introduced and the Government should take advantage of the crisis to do things that it could never attempt before, from addressing regressive subsidies to restructuring SOEs. It is in that backdrop; with much satisfaction that I review the work undertaken by the SEC over the reporting period.


The All Share Price Index (ASPI) witnessed a growth of over 25% in comparison to the year 2022. The rebounding of the ASPI helped erase much of the losses that were recorded in the year 2022. Similarly, the S&P SL 20 index ended the year on a positive note with a growth rate of over 16%. On the contrary, daily average turnover dropped to Rs. 1.69 billion in the year 2023. However, the market remained in the forefront in capital formation as it helped to raise Rs. 56.7 billion in the year under review.

Further, foreign investors remained interested as the total net foreign inflow surpassed Rs. 6 billion mark in 2023. Additionally, a marginal increase in foreign investors’ contribution to total market turnover was witnessed in the year, while local individuals continued to play a dominant role in activity levels of the market throughout the year. The market capitalisation to Gross Domestic Product (GDP) ratio remained at a moderate level of around 18%.

It is in that context, we at the SEC continue to engage in robust regulation and market development activities with a view to enhance the capital market footprint in the country. The key to building a deep and liquid market is building investor trust and confidence in the market. It is important to understand that the capital market plays a pivotal role as a source of financing for businesses to meet their capital requirements while creating investment avenues for investors.

• Demutualization of the CSE

Demutualization will provide the governance and management structures required for the operation of an efficient and effective stock exchange.

• Capacity Building at the Regulator Level and Market Intermediary Level

Capacity building at the regulatory level and the market intermediary level has become critically important with the enactment of the new SEC Act. Some of the initiatives that come under this reform include: building internal capacity to enhance the effectiveness and efficiency of the SEC’s regulatory function and responsibilities, increasing the minimum capital requirements of market intermediaries to enhance the overall operating standards of the market and revising licensing fees to defray enhanced regulatory supervision cost to ensure that only market operators with a certain stature and financial soundness will be eligible for the license.

• Enabling the listing of StateOwned Enterprises

The Government of Sri Lanka is in the process of implementing deep economic reforms to SOEs to enhance their productivity, competitiveness, and efficiency across the economy. Entry by SOEs into the capital market will benefit SOEs in numerous ways. As such, the SEC has already approved the rules applicable for SOE listings and the CSE launched a separate transitionary Board called the “Catalyst Board” to accommodate such SOE’s.

• Establishment a Multi-currency Exchange for foreign investors

A novel reform that has been included in the reform’s agenda is the establishment of a Multi-currency Exchange. It is expected that such an exchange will facilitate trading of multi-currency denominated securities whilst increasing the foreign portfolio investments to the country.

• Establishment of a Carbon Credit Trading Exchange

Carbon markets can help to accelerate the transformation needed in addressing the climate crisis. Effective, transparent and efficient carbon markets put a price on pollution and create an economic incentive for reducing emissions. Therefore, the SEC believes that establishing a Carbon Credit Trading Exchange would further strengthen Government of Sri Lanka’s mandate in achieving net zero status by 2050.

• Real Estate Investment Trusts

Under this reform, the SEC is looking at alternative avenues to make REITs an attractive investment avenue for both the issuer and for the investor. Currently, there are several properties in main cities where retail investors do not have the financial capacity to hold such properties. REITs provide a mechanism for retail investors to participate in the real estate market and benefit from the economic value created from such properties.

• Infrastructure Bonds

Infrastructure Bonds Listed on the Exchange would attract the private sector participation in infrastructure projects. Such bonds may be issued by Government agencies, municipal councils, local government councils, etc.

• Facilitating listings at the Empower Board

This special listing board was solely created to attract and facilitate the entry of SMEs into the capital market. However, it has not been actively marketed yet. SMEs are a critical component of the country’s growth. They make up around 52% of the country’s GDP while accounting for around 75% of all the enterprises in Sri Lanka. As such, it is vital that such entities are represented in the CSE. Empower Board listing will foster them to grow to their next level.

• Product Development

The SEC strives to remain abreast with new market developments occurring around the world. As such, together with the CSE, the SEC plans to introduce various new products and market infrastructure to the capital market under this reform. The products and market infrastructure include the introduction of Green Bonds/Blue Bonds (commonly known as Sustainable Bonds), Regulated Short Selling, Islamic Capital Market products such as Sukuks, Equity Crowd Funding platforms etc.

• Building Capital Market Awareness at School level

The SEC continues to enhance the financial literacy level among the public. In that regard, the SEC together with the National Institute of Education (NIE) is in the process of introducing the securities market as a subject to the student education curriculum from next year. I believe that it would be a game changer in the capital market landscape as it fosters capital market knowledge from a young age within a view to sway away from a traditional savings culture to a contemporary investing culture, which is imperative in country’s development.


I must say that the President Ranil Wickremesinghe took a very timely decision to promote financial literacy among the school population by establishing 100 Capital Market Clubs across the country to popularise stock market among the younger generation. To give effect to the President’s vision, the SEC in collaboration with the Presidential Secretariat, the Ministry of Education and the CSE embarked on a new initiative to promote financial literacy across the education system by establishing Capital Market Clubs in 100 schools in the country. The inaugural Capital Market Club was established in the Nugawela Central College under the patronage of the President Ranil Wickremasinghe on 31st August 2023.


We consider our staff members as our most valuable asset. I am pleased to state that we strengthened the operational capability of the SEC and recruited new staff members to enhance its institutional capacity. I would like to take this opportunity to thank the staff for extending their fullest support and commitment in overcoming the challenges that we faced in these trying times. My gratitude is extended to Mr. Faizal Salieh, Chairman of the SEC, for his guidance and unfailing support extended at all times. I would also like to thank the Members of the Commission for their steadfast support whilst sacrificing their personal and professional time to attend Commission and other Sub-Committee Meetings and for the encouragement given to the staff in its efforts to achieve the mandate of the SEC

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