The Governor of the Central Bank Mr. Ajith Nivard Cabral, Commission Members of the Securities and Exchange Commission and the Insurance Board of Sri Lanka, Director Generals of the SEC and the IBSL, The Executive Director of Singapore College of Insurance Ms. Karine Kam, distinguished invitees, guests, ladies and gentleman:

It gives me great pleasure and pride to be here today, at the inauguration of the Financial Services Academy, a long awaited dream come true for many of us at the Securities and Exchange Commission and the Insurance Board of Sri Lanka. The Governor Mr. Nivard Cabral made this possible by offering the central banks' training center premises and facilities for the FSA's activities.

The Stock Market of Sri Lanka, as you are aware, has been progressing steadily for the past decade or so. The recent years have witnessed all indices and growth indicators reaching record levels, surpassing many of the high points reached in the past. This prompted our stock market to be dubbed as one of the best performing stock markets in Asia. Whilst applauding the heights our capital market has reached, I would like to remind that this is just the beginning of a long journey. We still have not tapped the full potential of its ability to serve as an engine of growth in attaining the economic prosperity of the country.

The Market capitalization of Sri Lanka is around U.S.$ 9 billion. While this is a considerable amount, benchmark studies with other economies have shown greater reliance, on capital market, as a key source of fund raising. For instance the market cap of India and Malaysia are approximately U.S.$ 800 and 250 billion respectively!!

Against this backdrop I would like to emphasize that none of us could over-estimate the importance of a capital market to a nations' development. We all know that the potential benefits of mobilizing capital markets are immense, but, so are the challenges.

One of the key reasons for the capital market not to expand to the extent and potential that the business community may have expected it to grow, is perhaps the knowledge dearth of necessary skills among the persons involved in the capital market operations. Today, the financial environment, like any other is fast changing. Bear markets, bull markets, hedging, close ended funds, expanding financial options have been embedded into our vocabulary, which we thought was ‘technical jargon' not so long ago. Thus, financial literacy has become as important as computer literacy. All the more reason why I believe that the establishment of the FSA came not a minute too soon, not a minute too late.

The primary focus of the FSA would be to enhance skills training and development in the Financial Services Sector, building the necessary competencies that are needed to keep abreast of new developments taking place within the industry on a continuing basis.

Let me give you a rough overview on how the operations of the FSA would be conducted. The FSA would primarily constitute of two branches, one for the skills development in capital markets and the other for the development of the insurance sector. Both these branches would have two independent Educational Advisory Boards. The capital market advisory board will comprise of representatives from Stock Brokers, Primary Dealers, the Colombo Stock Exchange, Unit Trusts and a representative of the CFA. Insurance Brokers, Insurance Companies and the Insurance Institute would be represented in the Insurance advisory Board.

The Capital Market Development arm of the Academy, would in particular strive to heal the knowledge dearth in capital market operations, ensuring that the capital market will be well positioned to support Sri Lanka's economic development, creating wealth among the urban and rural populace. It is envisaged that the FSA, would become the much-awaited catalyst that would strengthen our resolve to meet the challenge of making Sri Lanka a share owning democracy.

With a view to gradually increase the insurance penetration and density in Sri Lanka, which has made great strides of development within a short time span, the FSA would create wide spread awareness on the benefits of insurance amongst the sub-urban and rural sectors of the society. Currently the insurance penetration as a percentage of the GDP is around 1.58% for all types of Insurance, while in India it is around 3% of their GDP. The penetration of life insurance in Sri Lanka is around 7 % of the population and in INDIA it is around 25% of their insurable population. You can see that we have a lot of room to expand the Insurance industry in Sri Lanka.

The FSA would also cater to the needs of those reaching for higher professional training eliminating the profound knowledge deficit the insurance industry is facing today.

Rather than reinventing the wheel, it's our intention to affiliate ourselves with institutions that are tried and tested. We believe that their experience and technological know how, would undoubtedly guide our FSA. I'm pleased to state that we have already affiliated with the Singapore College of Insurance, which I'm sure will allow us to create a stronger, more innovative and adoptive Institute that will meet and exceed our education and training mission. You have already heard from the Executive Director Karine Kam of the Singapore college of Insurance about our collaboration.

We are on the look out for potential collaborations for the Capital Market arm of the FSA as well.

Finally, I wish to make a humble request on behalf of the FSA, from all of you who are gathered here. The FSA has been created for the benefit of the capital market and the insurance industry participants. Thus it should be moulded and shaped by you to best fit the expectations and the requirements of the industry. Working together, I believe we can make this a regionally renowned center for excellence in skills training and development for the financial services industry.

Abraham Lincoln once said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe”. I wish Dr. Thilakarthne, the Director of the FSA, and his team, every success in sharpening the mindset of people, to bridge the knowledge gap, to reach new heights in development, as an institute, industry and a nation.

Thank you.

E-mail : mail@sec.gov.lk