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Colombo Stock Exchange and its regulator reiterated their commitment to pursue the introduction of derivatives trading soon, a development much talked about, though less action has been taken, at a recent forum.
"We haven't dropped the idea of introducing derivatives trading in Sri Lanka. Hopefully we will be able to commence it at least at the end of this year or in the early part of next year" Indrani Sugathadasa, Chairperson of Securities and Exchange Commission (SEC) said announcing the capital market's future plans for 2011-2013.
What Does Derivative Mean?
A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.
Sugathadasa also said that for the last couple of years they had been trying to set up the regulatory framework required for derivatives trading.
"Amendments to the SEC Act can not be done in a hasty manner" she noted. Speaking to the Daily Mirror Business, Vajira Wijegunewardena, Director Capital Market Develoment & Research of SEC said that currently the CSE was in the process of putting up a clearing corporation in place, which is a pre-requisite for derivatives trading.
"We hope to see the setting up of a clearing corporation by the end of this year, and with that in place, we'll be able to start derivatives trading shortly" he said.
He also pointed out that with the local capital market developing at a record pace, following the positive macro economic scenario after the war, the market needed to come up with new products such as derivatives in which investors could hedge their risks. The National Stock Exchange of India introduced a clearing house system by setting up the National Securities Clearing Corporation Ltd. (NCCSL) in 1995 and commenced operations in 1996. As to date NCCSL is a fully owned subsidiary of NSE.
NSCCL has empanelled 13 clearing banks to provide banking services to trading members and has established connectivity with both their depositories for electronic settlement of securities.
Last week SEC in collaboration with the Colombo bourse announced their plans to be the number one performing market in the world with a market capitalization of Rs.3 trillion.
"We haven't dropped the idea of introducing derivatives trading in Sri Lanka. Hopefully we will be able to commence it at least at the end of this year or in the early part of next year" Indrani Sugathadasa, Chairperson of Securities and Exchange Commission (SEC) said announcing the capital market's future plans for 2011-2013.
What Does Derivative Mean?
A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.
Sugathadasa also said that for the last couple of years they had been trying to set up the regulatory framework required for derivatives trading.
"Amendments to the SEC Act can not be done in a hasty manner" she noted. Speaking to the Daily Mirror Business, Vajira Wijegunewardena, Director Capital Market Develoment & Research of SEC said that currently the CSE was in the process of putting up a clearing corporation in place, which is a pre-requisite for derivatives trading.
"We hope to see the setting up of a clearing corporation by the end of this year, and with that in place, we'll be able to start derivatives trading shortly" he said.
He also pointed out that with the local capital market developing at a record pace, following the positive macro economic scenario after the war, the market needed to come up with new products such as derivatives in which investors could hedge their risks. The National Stock Exchange of India introduced a clearing house system by setting up the National Securities Clearing Corporation Ltd. (NCCSL) in 1995 and commenced operations in 1996. As to date NCCSL is a fully owned subsidiary of NSE.
NSCCL has empanelled 13 clearing banks to provide banking services to trading members and has established connectivity with both their depositories for electronic settlement of securities.
Last week SEC in collaboration with the Colombo bourse announced their plans to be the number one performing market in the world with a market capitalization of Rs.3 trillion.
