Derivative Drive

The top level Financial Reforms Committee is looking at ways to promote derivative instruments in Sri Lanka.
The committee has appointed debt market specialist Mangala Boyagoda, CEO of Standard Chartered Bank, to look at the legal gaps holding firms back from using derivative instruments.rn

rnA derivative is a contract between two parties to buy or sell an asset in the future at a fixed price.

The price of the asset is linked to the price of the underlying financial instrument.rn

rnThe absence of laws and local accounting standard has not prevented firms from taking the plunge.rn

rnA few transactions have taken place within the normal contract law.rn

rnThe consultant will look into the legal and accounting structures currently in place and recommend any changes if needed.rn