19 November, 2018

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Let SEC Supervise Bond Issues And Related Secondary Market Transactions: Jayaratne Tells Coomaraswamy

Good governance activist and former Chairman of the Ceylon Chamber of Commerce, Chandra Jayaratne has requested the new Central Bank Governor, Dr. Indrajit Coomaraswamy, to let the Securities and Exchange Commission (SEC) be the regulatory oversight over Government bond issues and the related secondary market transactions.

Indrajit Coomaraswamy

Indrajit Coomaraswamy

In a letter addressed to Dr. Coomaraswamy on July 18, Jayaratne said, “the Securities & Exchange Commission that the Securities & Exchange Commission, needs to make a minor amendment to its empowering enactment, to undertake this expanded role of supervision of the Government Bond issues and associated secondary market transaction.”

“I trust that you and the Monetary Board, will immediately begin negotiation with the Securities & Exchange Commission and the Government, for the formal transfer of the oversight responsibility over Government Bond Issues and associated Secondary Market dealings, to the Securities & Exchange Commission.”

Citing reasons for his request, Jayaratne recalled the recent controversial bond issues, which he noted had clearly demonstrated that the Central Bank suffers from definite conflicts of interests.

“Whilst acknowledging that the Central Bank of Sri Lanka has competent professionals and infrastructure support to provide the oversight framework as set out above, recent controversial bond issues related experiences have clearly demonstrated that the Central Bank suffers from definite conflicts of interests, due its role in
• Being the primary issuer and manager of the Government Bond issues;
• Being the effective Manger and Portfolio Investor of the largest Securities market player in Sri Lanka – the Employees Provident Fund.”

“In addition, it is commonly believed that the secondary market information data set maintained by the Central Bank is inadequate and incomplete for effective regulation of market and associated intermediaries. It is reported that the records maintained in the Central Bank, covering the secondary market transactions, fail to record the basic market data relevant to the prices at which the secondary market transactions have taken place,” Jayaratne added.

Below is the full text of Jayaratne’s letter;

Dr. Indrajit Coomaraswamy,
Governor, Central Bank,
Central Bank of Sri Lanka,
Janadhipathi Mawatha,
Colombo 1.

Dear Sir,

Regulatory Oversight Accountability over Government Bond Issues and Related Secondary Market Transactions

You would no doubt agree, that effective and professional best practices embedded regulatory oversight over Government bond issues and related secondary market transactions, ensuring that engaged intermediaries duly discharge their professional commitments in line with best market practices, are an essential imperative of a well governed securities market in Sri Lanka.

Such a governance framework is also an essential investor right, as endorsed by the Securities & Exchange Commission of Sri Lanka and the Chartered Financial Analysts Society of Sri Lanka ( refer attachment). These rights need to be duly discharged through ensuring that; “all associated financial professionals and intermediary organizations are

  • Honest, competent, and ethical in conduct and complies with applicable law;
  • Independent and objective in advice and assistance, based on informed analysis, prudent judgment, and diligent effort;
  • Financial interests of the investor takes precedence over those of the professional and organization;
  • Fair in treatment in relation to other clients;
  • Disclosure of any existing or potential conflicts of interest in providing products or services;
  • Understanding the clients circumstances and ensuring advice is based on clients financial objectives and constraints;
  • Clear, accurate, complete and timely communications;
  • Fees and costs involved be transparent;
  • Confidentiality of information assured;
  • Complete supporting records are maintained

Whilst acknowledging that the Central Bank of Sri Lanka has competent professionals and infrastructure support to provide the oversight framework as set out above, recent controversial bond issues related experiences have clearly demonstrated that the Central Bank suffers from definite conflicts of interests, due its role in

  • Being the primary issuer and manager of the Government Bond issues;
  • Being the effective Manger and Portfolio Investor of the largest Securities market player in Sri Lanka – the Employees Provident Fund

In addition, it is commonly believed that the secondary market information data set maintained by the Central Bank is inadequate and incomplete for effective regulation of market and associated intermediaries. It is reported that the records maintained in the Central Bank, covering the secondary market transactions, fail to record the basic market data relevant to the prices at which the secondary market transactions have taken place.

In the light of above it is urged that the Monetary Board resolves to assign the role and responsibility to for regulatory oversight over Government bond issues and the related secondary market transactions to the Securities & Exchange Commission, at the earliest opportunity.

You will note from the attached copies of correspondence with the Securities & Exchange Commission, that the Securities & Exchange Commission, needs to make a minor amendment to its empowering enactment, to undertake this expanded role of supervision of the Government Bond issues and associated secondary market..

I trust that you and the Monetary Board, will immediately begin negotiation with the Securities & Exchange Commission and the Government, for the formal transfer of the oversight responsibility over Government Bond Issues and associated Secondary Market dealings, to the Securities & Exchange Commission.

Yours Sincerely,

Chandra Jayaratne

CC. The President, The Prime Minister, The Speaker, Leader of Opposition, Minister of Finance, Minister of Justice, Monetary Board, Chairman SEC, The Auditor General, Attorney General, Chairman COPE , Ceylon Chamber of Commerce

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Latest comments

  • 10
    4

    Who will monitor SEC ? Nalaka Godahewa ??

    I have heard enough from this ‘I know all’ Chandra Jayaratne !

    • 1
      0

      [Edited out]

    • 2
      0

      True!!! Have had enough of this guy’s lampoon. If anyone bothers to take a look at all his letters they are all extracts of code of ethics and rewritten as it’s in every single letter. As long as buffoons in this country keep blowing his ego and agenda without acknowledging his ridiculous behaviour and useless tirade he’d keep ranting.

  • 10
    6

    Chandra Jayaratne is a Padithaya on all matters relating to Finance eh?

  • 6
    0

    Central bank can not be monitored by any other government body, Central Bank above any government institution.

    Put clear guild lines and reporting lines and ethics. all problems will be sorted out

  • 10
    1

    Chandra Jayaratne nobody needs your two cents worth advice and please mind your business.The new CB Governor is smart enough to take decisions for gods sake you and your media coolies stay away.

    • 0
      0

      [Edited out]

  • 1
    0

    [Edited out]

  • 7
    1

    Chandra Jayaratna is famous for trying to shut the door once the horse has bolted. Perhaps someone should look in to what he was doing all those years whilst the Rajapaksas were in power. Was he afraid to suggest these things then?

    Leave the professional work to the professionals, Chandra.

  • 1
    0

    The SECOND has been under a cloud for almost a decade re:activities of its members and policing methods. The CB is well versed in its responsibilities. The vultures will be out to steal if the Bond issuevis moved from the supervision of the CB.

  • 0
    0

    [Edited out]

  • 4
    1

    Dr. Coomaraswamy ,

    Sir, You have the backing of the President, the PM
    and the Finance minister, of the coalition and you know the subject
    well and needs no advice. So pls go ahead and do it your way, instead
    making a muddle of it by listening to craps, as Mr. Mahendran did.
    There could be occasional outbursts from COPE,and pay no attention as
    it is no more a democratic organization but a communal organization,
    who wants to disrupt parliamentary proceedings.

    Few decades ago, when the Governors of CB were not dictated by the
    Politicians. They were petty kings, highly respected and did not
    interact with the public or media and only advised the Finance minister on the country’s financial position and people paid respect
    to this prestigious position but today ?

  • 4
    0

    I am baffled by the stand of the writer to transfer some of the powers of the Central Bank to the SEC. The reason assigned by the author quoted verbatim as follows:

    “Whilst acknowledging that the Central Bank of Sri Lanka has competent professionals and infrastructure support to provide the oversight framework as set out above, recent controversial bond issues related experiences have clearly demonstrated that the Central Bank suffers from definite conflicts of interests, ……”

    Now what is the guarantee that the SEC would not have any conflict of interest situations at all? I have not forgotten the incident that the late Mr. K. N. Choksy as the Minister of Finance calling upon the chairman of the SEC of the day to resign from his position, again some conflict of interest issue.

    The fact remains that there isn’t any institution which can be identified as honest and upright all the time. Time and again there are black sheep emerging from it tarnishes the image of the institution.

    The standard remedy is all of us in society must pleadge to uproot vices of the society and the officials appointed engaging in shady deals must be promptly dealt with, instead attempting it to cover up.

    • 5
      0

      Common sense
      you wrote “I am baffled by the stand of the writer to transfer some of the powers of the Central Bank to the SEC. “
      ask your self who is the writer?
      What is his qualification in banking?
      What is his interest in the CB?
      Is he trying to appease his master who is outed now but hoping he will come back to power?
      Once you have the answers to the above question your bafflement will vanish in the thin air.

      • 4
        0

        Chandra Jayaratne is a person from whom the COPE takes instructions and advice. Was the COPE in slumber during the time when Nivard Cabral was running the affairs of the CB and where was Chandra Jayaratne then?

  • 4
    0

    We seem to have a new Governer of Sri Lanka Chandra Jayaratne in as much as we had a “governer” of the central Bank W.A.Wijewardene. These arm chair pundits seems to be the so called “magic wands” for all our woes.Lets take their “two cents worth comments” with a pinch of salt and dump it into the waste paper basket where it rightly belongs.These are voices in the wilderness

  • 2
    0

    We don’t have to go that far in analysing about individuals and ulterior motives for the moment. The writing of the author as I quoted itself is enough to point out the absurdity as per the comment I have made earlier. In a country some have to be entrusted with a job of work and if there is crooked activity in doing that work there should be remedies to punish the recalcitrants. Transfering the obligation from one party to another is neither here nor there.

  • 2
    0

    Read: https://www.colombotelegraph.com/index.php/weliamuna-controversy-now-chandra-jayaratne-goes-silent/

    May 16, 2015 at 8:34 am

    Chandra Jayaratne is a hypocrite.

    He was a Commissioner of the Public Enterprise Reform Commission and a director of Lankem during the CBK regime.

    Lankem and Chandra Jayaratne publicly opposed the sale of Kotagala Plantations through George Steuarts Management to a Malysian Company.

    Privatizations were suspended after this.

    Shortly thereafter Lankem of which Chandra Jayarane was a director, who had earlier raised objections to the legality of the sale to the malaysian companye purchased Kotagala Plantations from the Malaysian Company and PERC refused to take any action.

    The partner in the law firm retained by PERC to investigate the affair was also a director of Lankem .

    Chandra Jayaratne throughout the period was a Commissioner of PERC andalso a director of Lankem Ceylon.

    When the scandal broke in the media Chandra Jayaratne like he is doing now sought to defend his actions but was forced to resign.

    This was extensively covered in the media (pre internet days) and the Island editor at the time (I belive it was Gamini Weerakoone) wrote an appropriate editorial.A little resarch in the newspaper archives of the Sunday Leader and the Island of 1996 will reveal all.

    • 1
      0

      Sureh Costa
      I couldn’t agree with you more.[Edited out]

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