SEC | SECURITIES AND EXCHANGE
COMMISSION OF SRI LANKA
ශ්‍රී ලංකා වටිනාපත්‍ර කොමිෂන් සභාව இலங்கை பங்குச் சந்தை ஆணைக்குழு

09TH NOVEMBER 2026

Ref: SEC/ADG/2026/11/327

TO: CENTRAL DEPOSITORY SYSTEMS (PVT) LTD

DIRECTIVE ISSUED IN TERMS OF SECTION 16(c) OF THE SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA ACT NO. 19 OF 2021

The Securities and Exchange Commission of Sri Lanka (SEC), at its 537th and 538th Commission Meetings approved the implementation of a decentralized onboarding framework for the onboarding of Country Funds, Regional Funds and Global Funds (“Foreign Portfolio Investment Funds” or “FPI funds”).

Pursuant to that approval,

I. the existing process for the onboarding of FPI Funds is hereby decentralized by way of a Directive dated 09th November 2026 (Ref: SEC/ADG/2026/11/326) issued under Section 16 (d) of the Securities and Exchange Commission of Sri Lanka Act, No. 19 of 2021 (the “SEC Act”) to Custodians as Supplementary Service Providers in terms of the SEC Act, whereby, Custodians have been authorised to carry out, and are responsible for, the operational onboarding and account opening functions in respect of FPI Funds under the regulatory framework introduced by the said Directive;

II. with effect from 01st December 2026, every Custodian onboarding an FPI Fund shall comply with the Guidelines Applicable for Custodians for Onboarding Foreign Portfolio Investment Funds under the Securities and Exchange Commission of Sri Lanka Act No.19 of 2021 (the “Guidelines”) attached to the said Directive, read together with the existing Guidelines applicable for Custodians who provide services to a Market Institution, Market Intermediary, Listed Public Company or a Collective Investment Scheme (the “Existing Guidelines”);

III. the onboarding of FPI Funds by Custodians shall be subject to post onboarding review by Central Depository Systems (Private) Limited (the “CDS”);

28 සහ 29 මහල, නැගෙනහිර කුළුණ
ලෝක වෙළඳ මධ්‍යස්ථානය
එකලොන් වර්ගය, කොළඹ 01.
28 மற்றும் 29 ஆம் மாடி, கிழக்கு கோபுரம்
உலக வர்த்தக மையம்
எச்சலான் சதுக்கம், கொழும்பு 01.
Level 28 & 29, East Tower
World Trade Centre
Echelon Square, Colombo 01, Sri Lanka.
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IOSCO
International Organization of Securities Commissions

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} +94 11 2143843
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} www.sec.gov.lk www.cmet.sec.gov.lk www.cmic.sec.gov.lk

IV. The CDS shall establish, implement and maintain a documented, risk-based framework for the post onboarding review of FPI Fund accounts opened by Custodians (the "Review Framework"). The said Review Framework of the CDS at a minimum, shall provide for:

(a) Selection of accounts: risk-based and sample-based selection of FPI Fund accounts for review, having regard to relevant risk indicators and the compliance history of the Custodians concerned;

(b) Scope of review: review of each selected account for:

(i) eligibility of the FPI Fund and its investor and account classification;

(ii) completeness of onboarding information and supporting documentation;

(iii) compliance with Know Your Customer (KYC), Customer Due Diligence (CDD) and beneficial ownership requirements; and

(iv) consistency with the Guidelines, the Existing Guidelines, the CDS Rules and other applicable legal requirements;

(c) Record keeping: written records of review findings, clarifications sought and obtained, corrective actions required and their resolution status; and

(d) Rectification: specified timelines within which a Custodian shall rectify deficiencies identified by the CDS, and follow up by the CDS until each deficiency is resolved;

V. The CDS shall promptly, report to the SEC any material, repeated or systemic deficiency, including any significant concern relating to regulatory compliance, anti-money laundering, countering the financing of terrorism or countering proliferation financing (AML/CFT/CPF), beneficial ownership, market integrity or investor protection. Where such a matter falls within the reporting obligations under the Financial Transactions Reporting Act, No. 6 of 2006, the CDS shall also report it to the Financial Intelligence Unit of Sri Lanka (FIU).

VI. The CDS shall submit a report to the SEC within 20 days of the end of each quarter, setting out:

(a) review coverage, including the number of FPI Fund accounts opened and the number reviewed, by Custodians;

(b) key findings and the corrective actions required;

(c) matters unresolved at the end of the quarter and the reasons; and

(d) significant or recurring compliance trends, and any recommendations to the Commission.

VII. The records of CDS required to be maintained under this Directive shall be in readily retrievable and accessible form.

This Directive shall come into effect on 01st December 2026, and the CDS shall ensure full compliance with its provisions with effect from that date. Any non-compliances hereof shall be dealt with in terms of the SEC Act.

Tushara Jayaratne
ACTING DIRECTOR GENERAL