Logo of Phnom Penh Post newspaper Phnom Penh Post - Banks raise concerns for a new derivative trading law

Banks raise concerns for a new derivative trading law

Content image - Phnom Penh Post

Banks raise concerns for a new derivative trading law

The Association of Banks in Cambodia has called on the Securities and Exchange Commission to ensure that over-the-counter derivatives transacted by banks do not fall under the governance of the new draft prakas governing derivatives trading on Cambodia’s stock exchange.

Speaking at a workshop in Phnom Penh yesterday to provide feedback on the prakas, called Licensing and supervision on derivative trading, Charles Vann, deputy director-general of the Association of Banking Cambodia, said derivatives contracts transacted by banks are already regulated by the National Bank of Cambodia.

Van said that his members had “serious concerns” that the new draft law on exchange traded derivatives, in its current state, could be seen to overlap with NBC regulations.

“Derivatives transacted by banks in Cambodia are not securities per se, they do not have the qualities or features of a security which are debt or equity instruments which are negotiable and transferable,” he said, referring to exchange traded derivatives.

“The derivative instrument transacted by the bank are over-the-counter; bilateral transactions as part of the risk management of clients,” he added.

Van asked the SECC to include statements in the new law clarifying that it would not apply to over-the-counter derivatives.

“If such a change is not made, the ABC believes there will be some serious potential impact to the financial sector,” he said.

Van asked that the Banking Association in Cambodia be included in further meetings with the regulatory body regarding the review of the draft law.

Sou Socheat, director general of Securities Exchange and Commissions of Cambodia (SECC), said yesterday that the SECC has been working closely with National Bank of Cambodia to clarify issues relating to the overlap of derivative regulations.

The director general said he would consider the request of the Association of Banks in Cambodia to be involved in higher level discussions.

“The meeting today is to discuss and to gathering ideas. We collected good comments to consider complementing the draft prakas. Once we insert these and make [the parkas] ready, we will propose for approval on the prakas,” he said.

Socheat said he would not put a timeline on when the parkas would be ready for implementation or when the CSX would begin trading derivatives.

“It depends on our preparation. We cannot predict in advance how long or short because some time it’s risky when we do things very fast. So, we need to work carefully,” he said.

MOST VIEWED

  • Stock photo agencies cash in on Khmer Rouge tragedy
    Stock-photo companies selling images from S-21 raises ethics concerns

    A woman with short-cropped hair stares directly into the camera, her head cocked slightly to the side. On her lap is a sleeping infant just barely in the frame. The woman was the wife of a Khmer Rouge officer who fell out of favour, and

  • US think tank warns of China's 'ulterior motives'

    A US think tank on Tuesday warned that spreading Chinese investment in the Indo-Pacific follows a pattern of leveraging geopolitical influence at the expense of the nations receiving investment, including Cambodia. The report looks at a sample of 15 Chinese port development projects, noting that the

  • Defence Ministry denies weapons in smuggling case came from Cambodia

    After a Thai national was arrested last week for allegedly smuggling guns from Cambodia to Thailand, Cambodia's Defence Ministry has claimed the weapons seized during the arrest are not used in Cambodia, despite the fact that both types of rifle seized are commonly found in

  • Prime Minister: Take back islands from inactive developers

    The government will “take back” land on roughly 30 islands from private companies that have not made progress on planned developments, Prime Minister Hun Sen said in a speech on Monday that also targeted land-grabbing villagers and idle provincial governors. Speaking at the inauguration of the