Rebuilding Trust: Why Discipline and Transparency Must Anchor Sri Lanka's Financial Future

Predictable, rules-based market engagement is essential for long-term investor confidence because it creates consistent signaling; investors can understand why yields move, which strengthens trust in the system.

- By ROMESH GOMEZ, MANAGING DIRECTOR/ CEO-WEALTHTRUST SECURITIES LTD.

Mr. Romesh Gomez- Managing Director/CEO at WealthTrust Securities Limited

For a primary dealer, discipline means bidding and trading based on research, macro perspectives and predefined risk limits rather than reacting to market noise or emotion.

Speculation, particularly in the past, has shown its capacity to distort yields, amplify volatility and ultimately harm both investors and the broader system. While volatility within justifiable ranges can be a trader's friend, Sri Lanka's improved regulatory oversight and the widespread availability of information have helped limit excessive speculation. To reinforce discipline, I often share a trading framework encapsulated in the acronym "FEGH"-Fear, Emotion, Greed, Hope. It encourages traders not to fear justified positions, to avoid emotional decision-making, to take profits within target ranges instead of becoming greedy, and to avoid "hoping" that losing trades will reverse. Instead, they must cut losses in line with established limits.

Disciplined institutions also play a vital role in reducing systemic volatility. By managing duration and liquidity prudently, they avoid becoming forced sellers during stressed periods. For primary dealers, quoting two-way prices consistently enables continued market access, providing liquidity when investors need to enter or exit. This function becomes crucial during uncertainty, where credible execution protects clients and prevents disorderly markets. Over the past decade, WealthTrust Securities has delivered consistent profitability even as competitors faced fluctuations, proof that institutional discipline directly supports market stability.

Transparency as a Catalyst for Investor Trust