Qualification Framework

Qualification Framework for the Capital Market of Sri Lanka

Background

The Securities and Exchange Commission of Sri Lanka (SEC) introduced a Capital Market Qualification Framework (QF) under the ADB technical assistance. This QF is intended to ensure a minimum level of competency for investment advisors and thus serves as a quality standard for investment advisors in the stock broking industry in Sri Lanka.

The QF has established the Certificate in Capital Markets (CCM) as the basic securities market certification, and this is mandatory to be licensed as a Registered Investment Advisor (RIA) in Sri Lanka.

In 2017, the SEC revised the 2008 QF in the context of the developments taken place in the securities industry over the past 10 years. The revised QF provides for separate certifications for asset classes to accommodate equity, debt, derivatives, and unit trusts and enhance the RIA qualification to an apex qualification in the securities industry. The revised QF also strengthen the continuous professional development (CPD) requirements for investment advisors.

QF consists of seven course modules:

Series 1: Securities Markets and Instruments
Series 2: Equity Securities
Series 3: Debt Securities
Series 4: Derivatives
Series 5: Unit Trusts
Series 6: Investment Planning, Advising and Marketing
Series 7: Securities Regulation and Ethics

There are five different levels of certifications where each of the first four certificates will form the basic training required to obtain the license as an investment advisor for each asset class. The Certificate in Capital Markets will be the only qualification to become a RIA.

The certifications according to the present QF:

Certificate in Equity Securities
Certificate in Debt Securities
Certificate in Derivatives
Certificate in Unit Trusts
Certificate in Capital Markets

Additional certifications will be designed and introduced as and when new securities instruments are introduced to the market in the future. Each of the above five certifications leads to a licensing process for investment advisors for each asset class resulting in the following classes of investment advisors:

Certified Equity Securities Advisor
Certified Debt Securities Advisor
Certified Derivatives Securities Advisor
Certified Unit Trust Advisor
Registered Investment Advisor

The following Table shows a schematic of the QF. The highlighted boxes indicate the specific courses that form each Certification. Series 1 (Securities Markets and Instruments), Series 6 (Financial Planning, Advising and Marketing) and Series 7 (Securities Regulations & Ethics) are required for all the Certifications. In addition to these courses, each Certification requires a specialized course on the specific asset class or instrument such as equity, debt, derivatives and unit trusts for which the Certification is obtained.

Capital Market Education