Logo of Phnom Penh Post newspaper Phnom Penh Post - Currency risk in CSX two-day settlements

Currency risk in CSX two-day settlements

Currency risk in CSX two-day settlements

THE Securities and Exchange Commission of Cambodia is set to require trades on the new stock exchange to be settled after two days, as experts said the timeframe ought to be kept as short as possible.

Although analysts widely supported the timeframe, called ‘T + 2’ in a draft prakas, or edict, obtained yesterday, they said a shorter settlement period will minimise the impact of currency fluctuations on transactions.

Companies are set list on the Cambodia Securities Exchange in riel, but settlements are allowed in either local currency or dollars for the first three years of operation.

Asian Development Bank’s Principal Economist at the Office of Regional Economic Integration Jayant Menon wrote yesterday that it was the settlement period where exposure to currency risk really exists, given the currency of listing and the currency of settlement could differ.

“Therefore, the shorter the better,” he said. “… T+2 is quite short, especially for an emerging market.”

The main challenge for the clearance system was the legal and regulatory framework, he said.

“These need to be strengthened, and the National Bank of Cambodia needs to be actively involved in ensuring this,” he wrote.

ACLEDA Securities Director Svay Hay said he supported two-day time frame.

“It is acceptable for us because we will have enough time to [complete] operations,” he said. “Using T+2 is very good – we don’t aim to use T+3 or more, which takes too much time.”

Svay Hay allowed that there would be some exchange rate risk for investors with capital in United States dollars if the riel fluctuated – but he added the riel had remained relatively stable over the last few years.

“We don’t have large fluctuations [in the value of the riel],” he said. “This is good, as it will draw investors to the market.”

Cambodia Securities Exchange Chief Executive Officer Hong Sok Hour said the SECC continued to work on the more complex regulations to ensure a successful exchange, which is set to launch in July.

“We are a new market, we will have some difficulty with the first step – that is why we want to develop simple [regulations],” he said.

ACLEDA Bank, CANADIA Bank, and the Bank for Investment and Development of Cambodia have been licensed as cash settlement agents by the SECC earlier this month.

Operators of a clearing facility will also be obligated to set up accounts under the oversight of the CSX, according to the draft parkas obtained yesterday.

Trading hours will initially be set from 8:00 am to 11:30 am, and trades are scheduled to be executed twice daily, at 9:00 am and 11:30 am.

Trading days are slated to be Monday to Friday, except public holidays.

Members who failed to settle a trade may see their trade cancelled, or have their trading suspended for a fixed period of time.

The SECC will hold public consultations on the timeframe – termed “T+2” – today and Wednesday, as well as the other provisions included in the draft “Rules on Securities Market Operations” prakas.

MOST VIEWED

  • Massive stingrays may live in Mekong’s deep pools

    US scientists have suggested that unexplored deep pools in the Mekong River in an area of Stung Treng could potentially be home to significant populations of giant freshwater stingrays, one of the world’s largest freshwater fish species. This comes as a fisherman hooked a 180

  • CCC team off on US business trip

    The Kingdom’s leading economists and private sector representatives have called on the US to renew its tax preferential status for Cambodian exports, as a Cambodia Chamber of Commerce (CCC) delegation departed for a weeklong business visit to the US, where they will meet with

  • PM takes time to meet, greet Cambodians living in the US

    After landing in the US ahead of the ASEAN-US Special Summit, Prime Minister Hun Sen was received by over 1,000 Cambodian-Americans including political analysts who welcomed him with greetings, fist bumps and selfies. Hun Sen also met with analyst Mak Hoeun, who had allegedly spoken ill

  • Khmer cinema classics back on big screen for free at WB Arena’s outdoor movies series

    On a recent Saturday evening at WB Arena, Bunsong was enjoying a tasty BBQ meal with his family after work on the long tables that had been arranged out in front of the restaurant as they watched a Khmer action movie on a big outdoor

  • PM heads to Washington for ASEAN-US special summit

    Regional and international issues and how to bring the ASEAN-US partnership to another level will be discussed at length as Prime Minister Hun Sen and his ministers arrive in Washington, DC, for a special summit on May 12-13. During the trip, Hun Sen and ASEAN

  • National Assembly refutes EU resolution

    The National Assembly (NA) has hit back at a European Parliament resolution condemning the political and human rights situation in Cambodia, calling it another display of the Parliament’s “double standards”. Key points of the resolution include a warning that the Parliament could exclude the