Traffic passes by the offices of Gold Financial Global in Phnom Penh yesterday. Photo by: Heng Chivoan
Thursday, 03 March 2011 15:01 May Kunmakara
FIVE domestic firms trading in derivatives 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 currently on launching the Cambodia Securities Exchange, which is slated for July, he said yesterday.
“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 were named as 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, 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.
Such assets include contracts for commodities such as gold and oil. Examples of derivatives include options and futures.
Representatives from some of the affected firms told The Post they were complying with the SECC’s announcement yesterday.
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 yesterday.
The firm had previously specialised online trading of foreign exchange currencies, spot metals, and crude oil, according to its website.
An official at Global Gold and Forex Investment, speaking on the condition of anonymity, 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.
“The SECC told us we can restart operations following the launch of the Cambodia Securities Exchange. Now, we do nothing – we’re just waiting for an announcement from the SECC to restart our operations.”