"The SEC is in the process of finalising the draft bill for the Demutualisation of the CSE to bring our capital market to be in line with those in more mature jurisdictions," Thilak Karunaratne said in the watchdog's annual report.
The SEC said Sri Lanka's cabinet of ministers had approved a draft bill to be brought as a special act of parliament. The watchdog was assisting the legal draftman's office to finalise the bill.
Sri Lanka's stock exchange is an entity limited by guarantee, nominally owned by a group of legacy broking houses called full members.
In the case of demutualisation they will get shares in the exchange. The stock exchange also has so-called trading members who were licensed later.
The SEC had also drafted changes to the governing law of the agency to set up a clearing house.
Securities and Exchange Board of India has given suggestions which were given to technical consultants for review.