Sri Lankan firms have just started raising money abroad mostly through syndicated loans and international bond issues usually involve about 200 million dollar volumes at one go.
At the moment the government sells dollar denominated bonds to qualified local investors with foreign currency accounts including banks.
Godahewa said the regulator was planning to allow market makers for debt, and invite primary dealers to trade on listed bonds.
Market makers quote two way prices in bond markets giving liquidity to sellers. At the moment holders of listed bond sometimes exits at steep discounts due to lack of buyers giving opportunities for market makers to step in.
For many listed bonds there are few or no quotes at any given time.
SEC had also asked the Central Bank to allow primary dealers in government debt to trade up to 10 percent of their capital in private debt, Godahewa said.
Godahewa said SEC was discussing with the Treasury and Insurance Board of Sri Lanka the possibilities of allowing greater involvement in corporate debt markets.
Plans were also being considered to allow Bloomberg and Reuters terminals to link to the stock exchange to trade corporate debt, he said.
Sri Lanka's listed debt markets took off this year after the SEC persuaded the Treasury to lift taxes on interest income on listed debt.
There has been over 20 billion rupees raised through debt in the stock exchange so far this year.
Godahewa said in some developed markets volumes of debt was much greater than equity.
In countries like the US, debt is not necessarily listed and exchange traded but is mostly an over-the-counter market.
However trades are reported through the US Financial Industry Regulatory Authority's FINRA TRACE system.
Sri Lanka also has an OTC debt market where lease backed securities have been issued, but there is no trade reporting system for price transparency.
Corrected/ market makers