Sri Lanka’s regulators will establish a central counter party (CCP) for equities, according to authorities who attended a joint meeting between the Securities and Exchange Commission of Sri Lanka (SEC) and Colombo Stock Exchange (CSE).
The Chairman of the SEC, Viraj Dayaratne PC who chaired the meeting, said that he expects the launch of the CCP for equities to be delivered on time, like the Delivery vs Payment (DvP) project, which was completed on-time and went live in July 2021.
SEC Director General Chinthaka Mendis said that the CCP business model should be developed in a cost-effective manner that would benefit all stakeholders in the market. CCPs are highly regulated institutions that specialize in managing counterparty credit risk.
CEO, CSE, Rajeeva Bandaranaike made a presentation on the overall scope of the CCP implementation and said CCP can offer significant benefits to the financial market in Sri Lanka and can be considered as part of the critical financial market infrastructure that is required and is of national interest.
The launch of Sri Lanka’s DvP and the creation of the CCP for equities is in line with the country’s SEC Act No. 19 2021. The act went into law last year to further develop effective regulation to build investors’ confidence, support efficient capital markets and execute international best practices in the banking and asset management industries.
