[PHNOM PENH POST]
THE Securities and Exchange Commission of Cambodia is set to require
trades on the new stock exchange to be settled after two days, as
experts said the timeframe ought to be kept as short as possible.
Although
analysts widely supported the timeframe, called ‘T + 2’ in a draft
prakas, or edict, obtained yesterday, they said a shorter settlement
period will minimise the impact of currency fluctuations on
transactions.
Companies are set list on the Cambodia Securities
Exchange in riel, but settlements are allowed in either local currency
or dollars for the first three years of operation.
Asian
Development Bank’s Principal Economist at the Office of Regional
Economic Integration Jayant Menon wrote yesterday that it was the
settlement period where exposure to currency risk really exists, given
the currency of listing and the currency of settlement could differ.
“Therefore, the shorter the better,” he said. “… T+2 is quite short, especially for an emerging market.”
The main challenge for the clearance system was the legal and regulatory framework, he said.
“These need to be strengthened, and the National Bank of Cambodia needs to be actively involved in ensuring this,” he wrote.
ACLEDA Securities Director Svay Hay said he supported two-day time frame.
“It
is acceptable for us because we will have enough time to [complete]
operations,” he said. “Using T+2 is very good – we don’t aim to use T+3
or more, which takes too much time.”
Svay Hay allowed that there
would be some exchange rate risk for investors with capital in United
States dollars if the riel fluctuated – but he added the riel had
remained relatively stable over the last few years.
“We don’t have large fluctuations [in the value of the riel],” he said. “This is good, as it will draw investors to the market.”
Cambodia
Securities Exchange Chief Executive Officer Hong Sok Hour said the SECC
continued to work on the more complex regulations to ensure a
successful exchange, which is set to launch in July.
“We are a
new market, we will have some difficulty with the first step – that is
why we want to develop simple [regulations],” he said.
ACLEDA
Bank, CANADIA Bank, and the Bank for Investment and Development of
Cambodia have been licensed as cash settlement agents by the SECC
earlier this month.
Operators of a clearing facility will also be
obligated to set up accounts under the oversight of the CSX, according
to the draft parkas obtained yesterday.
Trading hours will
initially be set from 8:00 am to 11:30 am, and trades are scheduled to
be executed twice daily, at 9:00 am and 11:30 am.
Trading days are slated to be Monday to Friday, except public holidays.
Members who failed to settle a trade may see their trade cancelled, or have their trading suspended for a fixed period of time.
The
SECC will hold public consultations on the timeframe – termed “T+2” –
today and Wednesday, as well as the other provisions included in the
draft “Rules on Securities Market Operations” prakas.
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