Photo by: bloomberg

Cotton is set to be traded on the Kingdom's first commodities exchange, which has been delayed.

Regulations have yet to be drawn up to govern Cambodia’s delayed commodities exchange.

The privately-owned Cambodian Mercantile Exchange was due to launch on July 30 and begin online trading of 11 commodities by mid-August, according to its backers.

Since its failure to launch, CMEX officials have repeatedly declined to comment on the reasons for the delay.

However, Ming Bankosal, director general of the Securities and Exchange Commission of Cambodia, has broken the silence.

He said that the exchange could not open until the regulations to govern both it and the Cambodian Stock Exchange – which is due to launch in July “at any cost” – were in place.

“We asked the CMEX not to operate because we need the regulations to be set up first and [then] they need to apply for the regulation,” he said.

“Now our priority is stetting up the stock exchange, but at the same time, side by side, we also have some staff working on commodity regulation.”

Once regulations were created, Ming Bankosal said, related ministries – such as the Ministry of Agriculture – would need to be consulted before a final draft was available.

He declined to comment on a time frame.

When contacted, CMEX Chief Operating Officer Kushal Kumar Shrestha declined to comment further and said management had decided not to be involved in any publicity at this time.

Commentators, however, said that a number of other factors could be at play.

John Brinsden, vice chairman of ACLEDA Bank, which is likely to be the banking partner for both exchanges, said: “It’s not just a question of regulations. You’ve got to have the infrastructure, and also educate people how to use it.

“These are things that take time, and in Cambodia, it always takes a little bit longer.”

Despite the apparent delay, he was confident that CMEX would have a positive impact once established.

“Cambodia has never had a commodities exchange before, and it’s getting by without it, but it would be good to have one at some time in the future as the agriculture market develops,” he said.

He said he did not feel that the government was dragging its feet and said officials were seeking advice and consulting widely because the concept was so new.

A mercantile exchange helps to monitor and regulate the price of the goods being traded by setting a market price for goods based on broader supply and demand.

Commodity traders usually use futures contracts, which can help farmers because they can hedge the cost of their produce when they know the future price they will receive for their goods on delivery.

CMEX said in July that, initially, 11 commodities would be listed on the Kingdom's exchange.

These were gold, silver, cotton, crude oil, heating oil, natural gas, soya-bean oil, soya beans, wheat, copper and coffee.