Cambodia’s $100 million derivatives market is certainly moving full steam ahead, with even the fallout of the Covid-19 pandemic failing to slow the industry’s progress.
More and more Cambodians are taking advantage of the convenience of trading on digital platforms to test their investment skills in the derivatives market to earn extra money, which is continuing to fuel growth in an industry that is still in its infancy.
Golden FX Link Capital Co Ltd CEO Chea Sothea said that with trading being largely online-based, performance in the industry had picked up pace despite the impact of the coronavirus outbreak.
“The derivatives industry is growing steadily and healthily. According to the SECC [Securities and Exchange Commission of Cambodia], trading volume in 2017 was only $5 million, but this increased to more than $100 million last year.
So far this year, we have already achieved 80 per cent of the trading volume conducted in 2019.
“We are certain that we can surpass the 2019 figure this year. Since it is an online business, the public is able to trade 24 hours a day, five days a week. People can trade using their computers or tablets, or even with their smartphones. This is one great advantage of the derivatives business,” said Sothea.
A derivatives market is the mechanism through which financial instruments such as future contracts or options are traded.
Derivatives trading in the Kingdom made its mark after the launch of the Cambodian Derivatives Exchange (CDX) in 2016, and currently more than 100 financial instruments including options and futures contracts can be traded through the various brokers licensed by the SECC.
The spot trading of gold, currencies and crude oil is currently proving popular among Cambodian investors.
Golden FX Link, which started operations in 2016, is a major player in the growing derivatives industry.
According to the SECC’s first quarterly report, the company has emerged as the top derivatives broker in the Kingdom based on trading volume. Thirty derivatives brokers drive the sector.
“The total number of trading transactions keeps increasing from month to month. The higher number of transactions reflects greater knowledge of the market and means more participation from market players, especially traders and investors. It is good for the industry and for the development of our national economy.
“More people are aware of the derivatives market because our mission is to educate the public on this. Along with the SECC and the CDX, as well as carrying out face-to-face training via video and Facebook, we have conducted workshops in 24 provinces and Phnom Penh.
“We have a strong workforce – with customer service, risk management and business teams who supply daily analysis to our clients so that they are well updated on movement in the market,” said Sothea.
Golden FX Link uses the MetaTrader 4 electronic trading platform as an online solution for investors, who can see the live streaming of prices and charts, place orders and manage their accounts.
Cambodia is witnessing a new phenomenon – one that is already proving itself resilient to even the most powerful of shocks – and with its capital and derivatives market continuing to expand, the Kingdom’s financial sector is further supported.