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Derivatives trading ban affirmed with gold rise

Derivatives trading ban affirmed with gold rise

High gold prices led the Securities and Exchange Commission of Cambodia to yesterday reiterate its ban on derivatives training in Cambodia.

The SECC had initially banned derivatives trading in March, singling out five firms that were trading without licences. It has reiterated its ban on derivatives trading specifically to focus on futures contracts for gold, officials said.

“Derivative instruments are higher risk compared to trading shares on the stock exchange,” said SECC Director General Ming Bankosal yesterday.

“We want the public to cooperate with us, as it will make it easier for us to take action to protect them from risks.”

Ming Bankosal yesterday said that the SECC has not yet licenced firms to trade derivatives as it has yet to finish establishing rules governing the industry.

High and increasing prices in gold may make it tempting to invest in futures contracts, though such investment is not allowed, he said.

SBJ (Cambodia) Deputy Manager Cao Minh Anh said the price of gold has increased noticeably in recent weeks due to the slowing global economy and depreciating US dollar.

The firm currently sells gold at $2,315 a damlung, or 1.2 troy ounces, compared with $1,823 in July.

In March, the SECC sent letters to Cambodia’s GFG88, First State Gold Investment Company, Global Gold Forex Investment Consultant, and CDMK Gold Company, specifically warning them to halt their work.

Some of the firms operated storefronts in Cambodia, but did most of their business online to a global audience, company officials said in March.

Yesterday, an official at GFG88 who asked not to be named said that after receiving the initial warning letter from the SECC, it had postponed its operations here.

“Now, we offer training course to the public – 80 percent of our trainees are fresh graduated students,” he said.

Ming Bankosal said the SECC is currently preparing regulations to licence derivatives trading in Cambodia, though there were several other priorities for the organisation.

“What we are doing now is make sure we run our stock exchange smoothly first,” he said.

The Cambodia Securities Exchange officially launched in July, though no companies have yet listed.

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