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Firms cautious of unclear CamEx rules

Firms cautious of unclear CamEx rules

Cambodia’s stock market officials are cautiously pushing ahead with a preliminary plan for the Kingdom’s first bourse which envisions limited daily trading on fewer than a dozen companies as the exchange gets off the ground sometime next year.

The Cambodia Stock Exchange, or CamEx, still faced “some challenges, but we are optimistic we can have it ready by the fourth quarter of 2009,” said Kao Thach, a lawyer who was transferred from the Ministry of Justice to head the Finance Ministry’s Financial Markets Division.

CamEx is a joint venture between the Korea Exchange (KRX) and the Cambodian government, which will share both the cost of setting up the exchange and the eventual profits.

But details on one of the most significant events in Cambodia’s nascent financial sector are meager, and the private sector is clamoring for more information, from shareholding limits on foreign investors to what percentage of a company’s shares must be listed.

“The stock market would be to our benefit as a means of raising additional capital and a means of spreading shares among more people,” said Acleda Bank vice chairman John Brinsden.

“But our planning depends on how we see the structure of the stock exchange and the supporting regulations. We need to know more about the beast,” he said.

The Cambodian stock exchange is partly modeled after the Kosdaq, Korea’s junior stock exchange, as well as after the Ho Chi Minh Stock Exchange, which launched in 2000 with only a handful of companies.

Although few decisions have been finalized, market organizers told the Post they are planning for an exchange that will initially employ about 50 people and hold three- to four-hour trading sessions each morning. Share prices would be announced and orders gathered two or three times per session.

But key regulations still need to be approved before trading can begin, and some potential market players fear that the preparatory work for such a complex undertaking has been left too late.

A stock exchange

is a good idea if,

and I say if, there

is a proper plan.

– Sok Kong

“Now is the right time for a stock exchange, but [the rules and regulations] should have been prepared a decade ago,” said Sok Kong, founder and owner of the petroleum firm Sokimex, which could list under the right conditions.
He said he was pushing the exchange to prepare a long-term regulatory plan to keep CamEx from experiencing the upheavals suffered by Vietnam’s stock market.

“Rules and regulations are important, you need them,” Sok Kong said.

“You can see in Vietnam that they are having problems now because they did not put these in place early on ... it is like a casino but even worse. A stock exchange is a good idea if, and I say if, there is a proper plan.”

Thach said that there were still two sets of pending regulations necessary for the exchange’s establishment: one implementing the Cambodia Securities and Exchange Commission, or SEC, and the other governing the operations of the Cambodia Stock Exchange itself.

The first set of regulations is drafted and at the committee level of the Council of Ministers, but Thach said that it would not likely get approval and Prime Minister Hun Sen’s signature until after the elections. The second set is still being drafted.

Both needed to be approved by the end of the year, Thach said, adding that preparation for next month’s general election had delayed debate on the regulations.

But Inpyo Lee, the project director from the Korea Exchange who has been working with the finance ministry on developing the local exchange since June 2007, said he was confident that a nine-member SEC would be in place by year’s end and able to determine disclosure guidelines and other listing issues.

The commission would likely be chaired by a senior finance ministry official, and include two members from the private sector, with the remainder drawn from government ministries, the National Bank of Cambodia and the Council of Ministers, he said.

Meanwhile, the organizers were continuing to train those likely to be involved with CamEx in all areas of securities market functions, including the SEC, the stock exchange, depository and settlement functions and the operation of securities companies.

Dozens of future staff and private sector workers in companies that may be interested in setting up stock brokerages or working in other aspects of the exchange have gone to Seoul for training, Lee said. Eventually, training will also be offered to potential investors.


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