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SECC calling for more investment in derivatives

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The Securities and Exchange Commission of Cambodia (SECC) director-general Sou Socheat. Heng Chivoan

SECC calling for more investment in derivatives

The Securities Exchange Commission of Cambodia (SECC) urged the public to add derivatives to their portfolio, as it could “benefit investors in the long run”.

Derivatives derive their value from the performance of an underlying asset such as a commodity, currency or stock.

But they are also used for speculation, leading some to charge that derivatives are akin to gambling, even though the underlying assets mitigate risk and price volatility for active investors.

Securities and Exchange Commission of Cambodia (SECC) director-general Sou Socheat said: “At the same time, investors must also be informed about the company [they are investing in] to avoid doing so in unlicensed ones.”

Derivatives, he said, were “new products available on the Cambodia Securities Exchange that could benefit investors in the long run”.

“To increase public awareness of the sector, we conducted 56 training programmes for potential issuers, investors and market professionals in 15 provinces with 5,662 participants.

“We increased international cooperation with regional and global market regulators by signing MoUs with Korea, China, Myanmar, Thailand, Vietnam, etc,” Socheat said.

He also stressed that unlicensed companies must inform investors of the accompanying risks that come with the prospect of long-term values to gain investor confidence and attract them to the market.

Derivative trading volumes rose from $84 million in 2018 to $120 million last year, according to SECC data.

Last year also saw a substantial increase in market participants such as five central counterparties for the derivatives market, 27 new derivatives brokers, five fund management firms and five trustees already licensed by the SECC.


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