Commodities exchange counting down to July 30

Photo by: Heng Chivoan
A farmer in Battambang province shows his soon-to-be-harvested cotton crop in October last year. Cotton is one of 11 products to be traded on Cambodia's new commodies exchange.

via Khmer NZ

Wednesday, 07 July 2010 15:01 Catherine James

CAMBODIA’S first commodities exchange, which will regulate and monitor the price of gold, oil, cotton and other goods, is set to launch at the end of this month, its chief operating officer has told the Post.

An opening ceremony for the Cambodian Mercantile Exchange will be held in Phnom Penh on July 30, hosting guest speaker Sir Richard Kapsch, the ex-governor of the Chicago Mercantile Exchange, one of the world’s largest commodities exchanges.

Kushal Kumar Shrestha, CMEX chief operating officer, said interest in the exchange had been growing since its opening was first flagged in March, but that the concept was still a new one for the Kingdom.

It will “take some time ... possibly a few years” before Cambodia’s commodities exchange is a fully fledged operation, Shrestha said yesterday.

Initially, 11 commodities will be tradable on the exchange – gold, silver, cotton, crude oil, heating oil, natural gas, soya-bean oil, soya bean, wheat, copper and coffee – as there is already an existing international market trading these commodities and tracking supply and demand.

Plans call for more local produce to be added as CMEX conducts further analysis, or “price discovery”, on the local market.

Shrestha said that setting market prices for commodities would benefit “everyone”.

“Price discovery of commodities is very important for the importers, exporters, growers, buyers, sellers: for everyone. Directly and indirectly – it will help them,” he said.

Benefits, he said, would come from setting a publicly available “fair” price on which trades could be made and future risk calculated.

CMEX is solely backed by two investors who have set up similar exchanges in their home country of India, as well as Nepal, Kenya and Sri Lanka.

The company plans to focus first on building awareness of the exchange in cities, beginning with Phnom Penh, and later expand to reach farmers in the provinces.

Shrestha said he believed the exchange was a step towards a stronger economy.

“For the economy to grow we need a stock exchange, we need a commodities exchange, we need a futures market, the derivative market. They play a very important role in the growth of the economy in every nation,” he said.

Officials at the long-anticipated Cambodian stock exchange, set to be launched later this year, seem to agree.

The Securities Exchange Commission of Cambodia has been in close discussions with CMEX, as it would ultimately set regulatory policies for both exchanges to operate under.

An SECC delegation including Deputy Director General Kao Thach and Director Chan Narith was now in Nepal to see an operational commodities exchange at work and draw from the Nepalese government experience in regulation, Shrestha said.

The delegation is expected to visit the Nepalese ministry of finance today, and will later meet the security board of Nepal.

Shrestha said CMEX hoped to have licensed up to half a dozen brokers once the exchange went live in mid-August, and had been calling for “entrepreneurs” to apply.

“The experience they need [as a broker] is minimal as CMEX will itself provide the training,” Shrestha said.

Acleda Bank was “70 percent” likely to become the exchange’s banking partner, Shrestha said, but the bank yesterday declined to comment until more was known.

The Ministry of Agriculture, Forestry and Fisheries declined to comment on how the exchange might impact upon farmers. An official said that not enough was understood about how the operation was going to work.