The Cambodia Securities Exchange (CSX) has decided to increase its daily limit on share price fluctuations, raising the maximum advance or decline from the previous day’s settlement price in an effort to allow investors more room for determining trading prices, according to a recent CSX announcement.
The CSX originally set its daily price limit at a relatively low 5 percent in an effort to maintain stability on its freshly established trading platform and avoid radical changes in the market.
Now, after six years of operations, it has decided to loosen its reins on the market and increase the limit to 10 percent, in turn increasing the likelihood of significant capital gain for traders.
Once a share price has increased or decreased by its daily limit, no more trading activity on the stock can take place for the day.
Lamun Soleil, director of market operations at the CSX, said yesterday that the change could attract investors to trade more actively.
“Stock prices in our market have not fluctuated much because our market is still passive, so it would be better to see more fluctuation,” he said. “We have had our market open for years now, and we can see that the market is safer than we originally thought it might be.”
Soleil said the daily price limit at other stock exchanges in the region have been higher than the original CSX limit, with Thailand’s set at 30 percent while both Vietnam and Laos have theirs set at 10 percent.
Daily price limits are typically set to curb the effects of mob psychology, which often involve panicked buying and selling. They were introduced into financial systems following the stock market crash of 1987.
The CSX also announced that it would now allow block trading, which is a noncompetitive and privately negotiated transaction separate from auction-based trade. It will also begin offering the option for investors to make market orders, buying or selling their investments immediately at the best available current price.