The capital market is expanding rapidly alongside broader economic growth, presenting both opportunities and challenges for investors. Nilupa Perera, newly appointed Chief Regulatory Officer (CRO) of the Colombo Stock Exchange (CSE), is leading efforts to ensure fairness and transparency while adapting regulatory frameworks to foster innovation and reflect market trends.
According to Perera, she seeks to strengthen oversight, standardise reporting, and encourage corporate compliance, create a more resilient market that supports investor confidence, and make participation accessible to both first-time and experienced investors.
What are your top strategic priorities as CRO in maintaining fairness and transparency during this phase of market growth?
As CRO, my main objective is to ensure fairness, transparency, and investor protection within Sri Lanka’s capital market. With the rapid growth we are seeing, it is essential to strengthen both market and corporate surveillance. We have procured a new surveillance system from NASDAQ, which will be in place before the end of the year. This will allow us to detect any potential market misconduct more effectively and maintain overall market integrity.
On the corporate side, our Listed Entity Compliance Division carefully reviews annual reports, interim financial statements, and corporate disclosures of listed entities to ensure they comply with the CSE listing rules. If we identify any irregularities or possible misconduct, we take it up with the SEC, including the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB).
In a growing market, it is essential to ensure transparent and accessible information for the market participant in order to standardise the data and to help investors, research analysts, and regulators with market analysis and effective oversight. We are introducing XBRL reporting for listed entities by March next year, creating a more standardised and transparent format to report financials of listed companies. At the same time, we are implementing adoptable regulatory frameworks to accommodate innovation responsibly and introduce new financial products without compromising oversight or investor confidence.
In this phase of market growth, a risk-based supervision framework will be adopted with regard to trading and depository participants to ensure investor confidence. Recent enforcement initiatives introduced by the CSE on listed entities and directors of listed entities for non-compliance with CSE Listing Rules have improved company accountability and timeliness in reporting, as well as ensuring greater adherence to the CSE Listing Rules.
In what ways does the existing regulatory framework help attract and facilitate new listings?
The regulatory framework continues to play a strong role in attracting and facilitating new listings by expanding market opportunities and product diversity. Beyond equities, we have introduced several new debt instruments, including Green, Social, Sustainability, and Sustainability-Linked (GSS+) bonds, which have already seen growing issuer interest. We also launched Sri Lanka’s first Sukuk, a Shariah-compliant debt product, along with the regulatory frameworks for Infrastructure, High Yield, and Perpetual bonds. The High Yield Bond regulatory framework allows finance and insurance companies to raise capital even with a rating below investment grade.
To further encourage participation, we have amended listing rules to make them more flexible — offering multiple criteria for entry and easing requirements for companies listing through introductions with timelines to meet public holding requirements. We have also developed a Catalyst Board to enable state-owned enterprises to list and a Redline Prospectus methodology to allow listed companies who have carried out public issuance during the past year to use the same prospectus for the next public issue, only requiring them to highlight changes.
Through these initiatives, we are making the market more accessible and inclusive for both issuers and investors. For instance, the Green bonds issuances and Shariah-compliant debt securities demonstrate how our reforms allow companies to reach new investor segments and tap into emerging sources of capital while maintaining transparency and regulatory oversight.
How do you foresee the next wave of regulatory challenges emerging, especially with technological disruption in markets?
I believe the next wave of regulatory change will largely stem from technological disruption, particularly artificial intelligence. As regulators, we must strengthen governance frameworks to address emerging risks while also enabling innovation. We need to position compliance not as a cost centre but as a competitive advantage. By embedding regulatory considerations into core business strategy, businesses can build resilience, foster trust, and gain an edge over competitors. Furthermore, as AI becomes more prevalent, a strong AI governance framework must be established within the organisation that includes clear ethical guidelines, risk classification of AI systems, and mechanisms for human oversight.
Alongside this, we have introduced corporate governance requirements mandating listed companies’ Audit and Risk Committees to review and assess the company’s risk management process, including the adequacy of the overall environment controls and controls in the areas of significant risks and business continuity plans.
In what ways will the regulatory framework need to adapt to emerging trends like ESG, digital assets, and AI-driven trading?
Our regulatory framework is evolving to ensure that listed companies remain accountable, transparent, and future-ready. Starting with ESG, the Colombo Stock Exchange introduced new corporate governance rules in 2023, requiring every listed company to establish and publish a clear ESG policy. This ensures boards actively integrate sustainability considerations into their decision-making. We have also expanded the sustainable finance products regulatory framework through Green, Social, Sustainability, and Sustainability-Linked (GSS+) bonds and are now preparing for the country’s first blue bond.
In line with global standards, the top 100 listed companies in terms of market capitalisation as at 1st January 2025 are now required to adopt the SLFRS S1 and S2 sustainability disclosure standards with effect from the financial year 2025, while the remaining listed companies are required to adopt SLFRS S1 and S2 on a phased-out timeline, ensuring more consistent and reliable reporting. While reporting based on Global Reporting Initiative (GRI) standards by listed companies is currently voluntary, we are considering making them mandatory in the future on a phased-out approach to strengthen sustainability reporting. The CSE is also considering an ESG Index.
As for digital assets, the CSE, along with the SEC, is assessing the framework needed to support such instruments responsibly, though implementation is still in the early stages. Regarding AI, while we use it operationally, regulatory measures for AI governance will be considered as these technologies mature within the financial ecosystem.
Our goal is to create a regulatory environment that balances innovation with investor protection, ensuring the market remains robust, inclusive, and aligned with international best practices.