Regulatory Alerts2023-01-01
SEC Directive on Minimum Financial Requirements
The Securities and Exchange Commission of Sri Lanka issued this directive to establish minimum financial requirements for various categories of market intermediaries. The regulation mandates specific minimum shareholders' funds and liquid capital thresholds for entities such as investment managers, credit rating agencies, and underwriters. These requirements became effective immediately upon the directive's issuance on April 26, 2023.
SEC SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA Office of the Director General
ශ්රී ලංකා සුරැකුම්පත් හා විනිමය කොමිෂන් සභාව இலங்கை பிணையங்கள் மற்றும் பரிவர்த்தனை ஆணைக்குழு
BY HAND Ref: SEC/DG/2023/04/91
26th April 2023
TO: MARKET INTERMEDIARIES UNDER THE FOLLOWING CATEGORIES
DIRECTIVE ISSUED UNDER AND IN TERMS OF SECTION 16(C) OF THE SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA ACT, NO. 19 OF 2021
RE: MINIMUM FINANCIAL REQUIREMENTS
The Securities and Exchange Commission of Sri Lanka at its 482nd meeting held on 03rd April 2023 resolved to stipulate "Minimum Financial Requirements" for the following categories of Market Intermediaries.
This Directive is issued in furtherance to the Rules applicable for Market Intermediaries issued via Gazette No. 2271/09 dated 15th March 2022 with the enactment of the Securities and Exchange Commission of Sri Lanka Act. No. 19 of 2021.
| Market Intermediary Category | Minimum Shareholders' Funds Requirement (LKR) | Minimum Liquid Capital Requirement |
|---|---|---|
| Investment Manager | 7.5 million | 2.5% of Total Liabilities |
| Credit Rating Agency | 15 million | 2.5% of Total Liabilities |
| Margin Provider | 30 million | 2.5% of Total Liabilities |
| Managing Company | 25 million | Not applicable for the Managing Company category as each Collective Investment Scheme under the respective Managing Company shall maintain liquidity levels as specified by the Commission in terms of the Collective Investment Scheme Code, 2022. |
| Underwriter | 50 million | The Liquid Capital Requirement will be determined case by case, based on the value of the amount underwritten. Accordingly, at the time of obtaining approval of the SEC for any underwriting obligation, the entity shall demonstrate availability of Liquid Capital equivalent to the value of the amount underwritten. |
| Entities acting under multiple licensing categories | Highest value stipulated for applicable licensing categories | 2.5% of Total Liabilities |
This Directive shall be effective from the date hereof.
(Signature)
Chinthaka Mendis DIRECTOR GENERAL
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