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First hedging deal transacted

First hedging deal transacted

ANZ Royal Bank has transacted a landmark commodities hedging deal with a local oil importer, officials at the bank said yesterday.

The deal allows the company, whose name ANZ Royal would not disclose, citing confidentiality agreements, to lock in an agreed price for the future sale of the product.

Cambodia imports all of its oil, and companies, not to mention consumers, are susceptible to global price fluctuations.

Should prices fall from the amount defined by the contract, the importer, instead of making less money, is protected and the risk shifts to the bank.

A statement from ANZ Royal said the deal took place on July 31.

“Giving local companies access to these kinds of risk-management tools is a different manifestation of financial inclusion, enabling Cambodians to operate on the same financial playing field as global and regional competitors,” said ANZ Royal CEO Grant Knuckey.

Though the deal will allow the oil importer to protect its inventory against falling prices, many details of the contract – its length, the fixed price – remain a secret.

Chea Serey, the deputy director general of banking supervision at the National Bank of Cambodia, said in a joint statement with ANZ Royal that the contract is a positive step forward in the financial sector.

“Suppliers, users and the Cambodian economy will benefit from the introduction of innovative hedging products to Cambodia,” she said.

ANZ Royal is the only financial institution the NBC has approved to provide non-exchange-traded hedging contracts, often referred to as over-the-counter derivatives trading.

In 2011, the Securities and Exchange Commission of Cambodia cracked down on unlicensed firms trading derivatives. Contacted yesterday, the SECC declined to comment on the progression of derivatives regulations.

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