Derivatives enter local capital market
Sanjeevi JAYASURIYA
Derivatives, a long-term capital market instrument will be introduced
to the Sri Lankan investment portfolio shortly.
This is the fist time that derivatives is introduced to the country’s
capital market.
|
Dr. Harendra Dissa Bandara |
It could not be implemented until recently due to lack of legal and
regulatory framework, Securities and Exchange Commission’s Financial
Services Academy Director Dr. Harendra Dissa Bandara told Daily News
Business.
The Securities and Exchange Commission Act No. 47 of 2009 enabled
derivatives to enter the local capital market. Derivatives were captured
under the definition of securities that can be traded in a stock
exchange, he said.
Derivatives are gaining much popularity in the emerging markets due
to its successful implementation and trading where Sri Lanka could
benefit.
The capital market expansion could be fuelled by trading of
derivatives by attracting potential investors.
The investors in the capital market face the risk and enjoy the
returns.
The derivatives is an instrument where the investors could have
another way of managing risk.
The investment portfolio will be diversified with the introduction of
derivatives.
Market participants can have contracts and they could pursue
underling assets in the future looking through derivatives.
It is important to educate potential investors regarding derivatives.
A two day regional conference on derivatives will be held in Colombo
today.
The objective of this program is to create awareness before the
product is introduced to the capital market.
A number of participants from countries such as India, Pakistan,
Bangladesh, Philippines and Malaysia is attending this conference.
Over 100 local participants from the stock brokering industry, market
intermediaries, unit trusts, academics, banking and financial
professionals and lawyers will benefit from this conference.
Topics such as forwards and futures- products and pricing, trading
strategies, clearing, settlement and risk management in derivatives will
be discussed. |
