SEC independence is essential to effectively regulate Sri Lanka’s increasingly complex capital markets, according to Bar Association of Sri Lanka President Rajeev Amarasuriya. He stressed that without full financial and operational autonomy, regulatory effectiveness could remain structurally constrained.
SEC independence essential to regulate Sri Lanka’s complex capital markets
Speaking at the 2026 Capital Market Symposium organized by the Bar Association of Sri Lanka, its President and former Securities and Exchange Commission Commissioner Rajeev Amarasuriya called for statutory safeguards to ensure the regulator operates free from administrative and financial dependency.
The focus on SEC independence comes at a time when Sri Lanka’s capital market ecosystem is undergoing structural transformation, driven by digitization, cross-border flows, evolving financial instruments, and heightened compliance standards. As market architecture becomes more sophisticated, regulatory capacity must expand proportionately to manage systemic risk, investor protection, and transparency obligations.
Amarasuriya emphasized that autonomy is not merely a governance preference but a functional necessity. Financial and operational independence, he argued, would enable the Securities and Exchange Commission of Sri Lanka to determine its cadre requirements and staff remuneration without external constraints. Such authority is critical to attracting and retaining highly specialized professionals, particularly in areas such as forensic accounting, derivatives regulation, cyber risk oversight, and enforcement litigation.
Under the existing SEC Act, the regulator has exercised a degree of operational discretion. However, Amarasuriya noted that without entrenched statutory guarantees, independence remains vulnerable to structural limitations. Institutional resilience, he suggested, depends on formalized autonomy rather than discretionary practice.
The discussion, moderated by former Colombo Stock Exchange Chief Regulatory Officer Renuke Wijayawardhena, brought together leading stakeholders across Sri Lanka’s capital market framework. The central theme revolved around aligning governance structures with the evolving demands of modern financial markets.
A key dimension of the debate was the structural separation between Market Regulation and Market Development functions within the SEC. Amarasuriya argued that conflating promotional objectives with enforcement responsibilities may dilute regulatory credibility. Globally, mature regulatory models emphasize clear institutional demarcation to prevent conflicts of interest. Market development initiatives, while important for growth, must not compromise surveillance rigor or enforcement impartiality.
The linkage between institutional independence and operational effectiveness was presented as direct and measurable. A regulator dependent on external administrative approvals for staffing or budget allocation may experience delays in enforcement actions, talent acquisition, or technological upgrades. In contrast, autonomous regulators typically exhibit stronger compliance monitoring, faster investigative response times, and enhanced investor confidence.
International comparisons further reinforced the argument. Leading capital market regulators derive their authority and credibility from legislatively embedded financial autonomy. This framework ensures that enforcement decisions remain insulated from political or commercial influence. In markets where such independence is robust, investor participation and foreign capital inflows tend to correlate positively with regulatory trustworthiness.
Sri Lanka’s capital market is transitioning toward greater complexity, incorporating structured products, cross-border listings, and advanced trading platforms. Regulatory architecture must therefore evolve from reactive supervision to proactive risk-based oversight. SEC independence, in this context, becomes a foundational enabler of adaptive governance.
Amarasuriya acknowledged progress made by the SEC in recent years, particularly in strengthening disclosure standards and enforcement mechanisms. However, he cautioned that sustained effectiveness requires institutional safeguards beyond administrative goodwill. Autonomy must be codified to withstand leadership changes, fiscal constraints, or shifting policy priorities.
The broader economic implication is significant. Capital markets function as intermediaries for long-term investment, corporate financing, and public confidence in financial systems. Weak regulatory independence can elevate systemic risk, undermine transparency, and deter foreign institutional investors. Conversely, credible oversight frameworks enhance market depth, liquidity, and resilience.
By advocating for strengthened SEC independence, the BASL President framed the issue as one of structural modernization rather than political contention. As Sri Lanka navigates post-crisis economic stabilization and capital market reform, institutional design will play a decisive role in shaping investor perception and regulatory durability.
Ultimately, the call underscores a strategic principle: complex markets demand equally sophisticated governance. Without operational and financial autonomy, regulatory institutions may struggle to match the speed and scale of financial innovation. Strengthening SEC independence could therefore serve as a cornerstone reform in Sri Lanka’s evolving capital market landscape.