Capital Market Institute to train brokers, directors

Ruwanthi Abeyakoon

CAPITAL MARKET: The Capital Market Institute will be established early next year, Director General of Securities and Exchange Commission (SEC) Channa de Silva said yesterday at an interactive session on `Fair Value Accounting' and `Day Trading'.

"We encourage everyone to come into the capital market. Capital Market Institute, which will be set up very soon, will engage in training brokers and directors. We are virtually aware of the limited access in rural area. We will provide a capital market diploma as a recognised qualification," de Silva said.

Speaking on `Fair Value Accounting' Pricewaterhouse partner, Sujeewa Mudalige said that it is not a mandatory mode of accounting. "Fair Value is the amount for which an asset could be exchanged between knowledgeable, willing partners in an arm's length transaction. It is extremely subjective," Mudalige said.

"The objective of fair value measurement is to reflect a fair value at the measurement date not to predict a future value. There should be an active market for this and the public should have access to the prices," he said.

He added that fair value should be adopted in a proper framework.

"Day trading is momentum. There is a chance of suffering severe loss. It is a full time job and the trader has to be vigilant than a stock broker," Chief Investment Officer of Eagle NDB Fund Managers, Namal Kamalgoda said speaking on risks associated with day trading.

Kamalgoda said that 98 per cent day traders in Taiwan lose money. " Traders have no idea of where they are operating.

They should understand the risks. There should be a discipline in the amount of money exposed. Traders should not spend everything," he said.

Kamalgoda added that a trader has to be extremely talented and lucky to make money in day trading.

"One has to be cautious of the risks associated with day trading. It is essentially vulnerable. Day trading could also be an addiction. Traders have to look at their own financial position. The risk level that can be afforded should be assessed and it requires knowledge of the market also," Director Public Relations and Market Development of SEC Malik Cader added.

CEO, HNB Stock Brokers Deva Ellepola also explained that capital market in Sri Lanka has high fluctuations and it reacts to the peace process.