Cyber threats: Global stock exchanges vigilant

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By 2017-09-22

By Ishara Gamage

The global stock markets regulators have tied up to mitigate the cyber security risks and face the next generation financial technology (fintech) advancements, International Organization of Securities Commissions (IOSCO), Secretary-General, Paul P. Andrews said.

Speaking at the recent press conference in Colombo after the first day of the annual meeting of IOSCO's Growth and Emerging Market Committee (GEMC) he said that they were closely monitoring the changing situation and setting standards to face these challenges.

"Even though cyber security is not a major threat for our member stock exchanges, we are closely monitoring the situation and taking relevant precautionary steps to mitigate risks. We also established a separate committee to study the fintech impact to the exchanges," he said.

He also said that IOSCO was satisfied with Sri Lanka's regulatory environment and its high impact on building the investor and business confidence in the country.
"Good regulation, global standards and good business go hand in hand," he said.
However the recent IOSCO report stated that building deep and liquid capital markets is significant for Sri Lanka.
"Sri Lanka's capital market is small, relatively illiquid and somewhat unsophisticated," the leading international policy forum for securities regulators and the global standard setter for securities regulation IOSCO said.

It also stated that Sri Lanka's market capitalization and the value of market turnover have fluctuated between 25% and 30% of GDP in recent years, significantly less than other jurisdictions in the region.

The key to building deep and liquid capital markets is building investor trust and confidence in those markets.
"This, too, remains a challenge for Sri Lanka," they said.

The report makes recommendations intended to bring Sri Lanka's regulatory framework in line with international standards.
"By building trust and confidence in the use of capital markets, implementation of the recommendations will also provide a framework and foundation for capital markets which will allow them to play a more significant and sustainable role in supporting the growth of the Sri Lankan economy in the future," it said.

The report also stated that there have been perceptions of a lack of independence in the Securities and Exchange Commission (SEC) from political interference in its decisions and day-to-day operations.
"These perceptions must be addressed through legislative and operational changes before trust and confidence in the commission and the markets it regulates can be restored," it said.

Meanwhile, speaking at the press conference, SEC Chairman Thilak Karunarathne said, the IOSCO assessment can be identified as a standard setter for Sri Lanka's capital market regulation.
SEC Chairman said, he hopes that the proposed SEC Act provides the required legal framework to fulfil most of the IOSCO recommendations.

"The new SEC Act will be presented to Parliament within a few months," he said.

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