Trading on Cambodia’s fledgling stock market will become easier after the bourse announced two new tools aimed at improving usability and access to the exchange platform.
A January 14 statement released by the Cambodian Securities Exchange (CSX) said two new trading methods, “continuous trading” and “trading before settlement”, will become available to traders from February 2.
“Continuous trading will allow investors to buy/sell securities immediately without having to wait for the execution times every half an hour as before,” the statement explained.
“On the other hand, trading before settlement will allow investors to use securities [or cash] to be received from a purchase [or sale] transaction to further trade immediately without having to wait until two trading days later as before.”
Soleil Lamun, deputy director of market operations at the CSX, said the new efficiencies make trading on Cambodia’s market less tiresome for foreign investors particularly.
“Foreign investors are used to the continuous trading in their countries or others and often complained about this waiting,” Lamun said.
“With this more convenient service and satisfaction from investors, the trading activities are believed to augment, and thus the market would become more liquid with the trading volume and value going up.”
Lamun said the move could prompt a day-trading culture and increased speculation over listed businesses.
“But this is not bad to the market as long as it is not manipulated and the trading is fair for every investor,” he said.
Brokers have welcomed the CSX’s announcement, saying it could bolster confidence in the local stock exchange, which currently has just two companies listed.
Svay Hay, CEO of Acleda Securities, said the efficiency move combined with up to three more companies expected to list on the CSX this year could prompt a significant increase in the number of active traders on the bourse.
“Many investors consider the ‘value of time approach’, and like to see the result of their trading immediately rather than waiting 30 minutes,” Hay said.
“And pre-settlement trading could potentially double the liquidity and shares traded in the market as investors are able to revolve their resources and transactions sooner.”
On average, over the past six months, more than $11,000 is traded each day, with only six days registering zero trades.
Stephen Hsu, CEO of Phnom Penh Securities, the firm that oversaw garment maker Grant Twins International’s June 2014 IPO, hoped the new trading tools would improve investor confidence in the CSX’s operations.
“We have to create a better environment for investors,” Hsu said.
“The point is to improve liquidity in the local market so that investors feel it is more exciting and convenient to trade and invest.”
Hsu noted, however, that the CSX is yet to establish a culture of day-trading around its two listed stocks.