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SECC eases derivative regulation

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SECC director-general Sou Socheat (pictured) told The Post on Monday that the amendment will reduce the requirements on licensing and the minimum capital needed for brokers. Supplied

SECC eases derivative regulation

The Securities and Exchange Commission of Cambodia (SECC) has approved an amendment which will make it easier for derivative brokers to receive licences.

The relaxation of requirements for the derivatives market aims to boost investor interest in it after it gained traction in recent years.

According to an SECC announcement on May 11, the amendment will make the process of applying for an SECC licence more efficient for derivative brokers.

“The Securities and Exchange Commission of Cambodia would like to inform the directors of derivative brokers and the public that the SECC approved Prakas No 005/20 dated May 5, 2020, which amends Prakas No 004/15 dated July 2, 2015 on the licensing of derivative brokers,” said the announcement.

SECC director-general Sou Socheat told The Post on Monday that the amendment will reduce the requirements on licensing and the minimum capital needed for brokers.

Socheat said: “As the market starts to grow, we request more human resources and experienced professionals. Some of the requirements we made were for the protection of the investor.”

Socheat previously explained to The Post that the derivatives market offers new financial products on the Cambodia Securities Exchange – the national stock exchange – that can benefit investors in the long run.

However, he said that before someone makes an investment decision, they should be aware of the details.

Derivatives are financial securities tied to underlying assets. Common assets include commodities, currencies, stocks and bonds. An investor can purchase contracts and their return is based on the market fluctuations of the asset.

The trading volume of derivatives in Cambodia increased from $84 million in 2018 to $200 million last year, SECC data shows.

The derivatives market currently boasts five central counterparties, 27 derivative brokers, five fund management companies and five trustees.

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