Regulator defers trading

via CAAI

Wednesday, 02 March 2011 18:57 May Kunmakara

Five domestic firms trading in derivatives products have been ordered to suspend their operations by the Securities and Exchange Commission of Cambodia.

SECC director general Ming Bankosal said Cambodian firms offering derivatives trading had operated without the necessary regulatory framework being in place.

The SECC was cooperating with the firms to prepare the necessary regulations, but the emphasis for the regulatory body was on launching the Cambodia Securities Exchange, scheduled for July, he said.

“We had not prepared any regulations or rules to manage them [firms trading in derivatives],” he said.

“It is not the priority for us – we want the public to understand the stock exchange first, then we will think about preparation of regulations for derivative products.”

In an announcement dated March 1 and obtained yesterday, the SECC ordered five companies to halt operations.

They are Gold Financial Global, First State Gold Investment Company, Global Gold and Forex Investment Consultant Company, CMDK Gold Company and International Gold Market Company.

Although the SECC did not define what it considered a derivative product in the announcement, the Korea Exchange, which is a 45 percent stakeholder in Cambodia’s planned bourse, said it considered a derivative to be a financial instrument that derives its value from other underlying assets, in a presentation given to Cambodian experts in December.

These assets often include contracts for commodities such as gold and oil. Examples of derivatives include options and futures.

Representatives of the affected firms told The Post they were complying with the SECC’s announcement. Gold Financial Global administrative and human resource supervisor Sales Sovanna said the company had changed its business model since receiving a warning about the impending move from the SECC late last year.

“We have delayed our business, and changed it to offer financial sector training courses to the public to assist them with understanding the industry,” he said.

The firm had previously specialised online trading of foreign exchange currencies, spot metals and crude oil.

An official at Global Gold and Forex Investment said the firm had suspended operations following notice from the SECC. “We postponed our operation after receiving information from them [the SECC] in January,” the official said.