CAMBODIA’S central counterparty firm, Derivatives Exchange (CDX), announced their cooperation with Indonesia-based Jakarta Futures Exchange (JFX) on Friday and expressed hope that the move would boost growth in the Kingdom’s derivatives trading market.
Signed in Phnom Penh, the agreement was facilitated by the Securities and Exchange Commission of Cambodia (SECC).
SECC Director-General Sou Socheat said since its launching three years ago, Cambodia’s derivatives market is showing of progress.
“After launching the market in 2015, we are seeing noteworthy improvement as the sector gets more awareness and confidence,” he said.
Derivatives trading consists of two main entities, a brokerage firm and central counterparty that acts as a clearing house.
Cambodia’s capital market regulator announced late last year that it would suspend the issuance of new central counterparty licences to derivatives trading firms, claiming capping the market at four was sufficient in serving current demand.
The SECC has, to date, granted licences to four central counterparty companies and 14 derivatives brokers. According to Socheat, however, currently, more than 10 brokerage firms applying for derivatives trading licenses.
“The rapid growth of brokers [in this sector] is now showing the potentail of the derivatives market in Cambodia,” he said.
Under the SECC’s minimum capital requirements, central counterparties are required to put down at least $5 million, while brokerage firms must put down $250,000.
Sammy So, CEO of Cambodian Derivatives Exchange Co Ltd, said that the cooperation between the two companies would boost the derivatives market in Cambodia.
“Through this deal, CDX will be able to receive advanced technologies in order to contribute to bring in more progress,” he said.
JFX is a central counterparty firm with more than 20 years in Indonesia’s derivatives trading market.
Stephanus Paulus Lumintang, director of JFX, said the Kingdom’s derivatives market is now showing progress that will encourage more active trading.
“This cooperation has created another key for the financial sector and will lay a solid foundation for accelerating markets in Cambodia,” he said.
