The laws and regulations that govern Cambodia’s securities market were derived from the Objectives and Principles of the International Organization for Securities Commissions (IOSCO) and the best practices in the region, according to Dr. Ming Bankosal, Director General of the SECC.
Dr. Bankosal said The development for the last several years under the government with the leadership of Samdech Decho Prime Minister Hun Sen, and with support from development partners in particular the Asian Development Bank, the SECC which is the regulatory body that governs the Cambodia Securities Exchange (CSX) has been established and licenses the securities firms to operate as underwriters, dealers, brokers and investment advisors that act as intermediaries with the public to carry out buy and sell orders for stock transactions. The SECC was established in 2008.
“Our authority is that of a government body which has the power to regulate the securities market,” he said.
The SECC is governed, in turn, by a Commission chaired by the Deputy Prime Minister Keat Chhon, Minister of Economy and Finance and includes representatives from the Ministry of Economy and Finance Dr. Aun Porn Moniroth, the National Bank of Cambodia, the Council of Ministers, the Ministry of Commerce, the Ministry of Justice, the Director General of The SECC and two private sector representatives, Dr. Ghanty Sam and Dr. Sam Sok Khon.
According to the law “The Minister of Economy and Finance is automatically the chairman and the members have a five-year mandate,” Dr. Bankosal said.
The SECC is the governing body that regulates, by law, the CSX.
“The SECC grants the approval to the CSX to operate as the clearing and settlement operator, the market operator and the depository operator,” Dr. Bankosal said. “It has been a lot of work over the last few years and we are now implementing those regulations“
Dr. Bankosal says the stock market business is international business, and while there are differences from one country to the other, the principles are the same.
The “book building” process has been undertaken by Tongyang Securities in their role as underwriter for the Cambodia’s first IPO, the Phnom Penh Water Supply Authority (PPWSA).
“Book building is a securities term that for the SECC means, the SECC approves in principle the disclosure documents of the issuer. The issuer and underwriter will conduct the book-building with disclosure documents which contain the price range of the shares. The investors who participate in the book building will put a single price within the price range with the quantity of securities that they wish to buy. The book-building process allows issuer to determine the price of the share through the market mechanism,” Dr Bankosal said.
“When the book building is finished, the offering price is determined then the disclosure document can be officially registered at the SECC and then the subscription can start.”
Seventy per cent of the shares are offered for investors who successfully participate in the book building and thirty per cent remaining are reserved for the unsuccessful investors who participated in the book building, and investors who did not participate in the book-building.
Dr. Bankosal stated that the approved disclosure document from SECC does not mean the SECC recommends the public to buy that share, so “investing is up to the investor’s decision and SECC recommends investors to read the disclosure document that gets approval from the SECC before making any decision. If investors feel it is good to invest in the company, do so; if not, don’t do it.”
Dr. Bankosal said it is important for the Cambodian public to understand what a stock market is.
“People who would like to participate in the securities market need to get an investor ID from SECC. For your investor ID, you can apply directly to the SECC or you can go to a securities firm,” Dr. Bankosal said.
Once the IPO process meets all the SECC requirements and subscription goes forward, then trading can begin.
Dr. Bankosal says the trading is in Riel as part of Cambodia’s strategy to promote the use of the currency. But the investors still have option to settle in US dollars but it is up to the agreement of the buyer and seller of securities.
“Sometimes the public comments are very sharp but it is good medicine for us. The comments from the public are very, very important. Without the comments and participation from the public we cannot develop the market properly.
“We know securities firms have invested a lot of money to support and develop the market and we appreciate and we try our best, with the chairmanship of Deputy Prime Minister Keat Chhon and under the guidance of Dr. Aun Porn Moniroth, the SECC, private companies and public all joining hands to develop the market successfully.”
Dr. Bankosal says the SECC appreciates the investments and hard work of the securities firms, the state-owned enterprises, related parties and private companies preparing for IPO, and listing on the CSX.
“These professionals have supported the SECC since the beginning and without their support the market will not be realized.”
He also appreciates and acts on, comments from the public he gets from the SECC’s website, which is in both English and Khmer. You can provide anonymous comments.
The website is: http://www.secc.gov.kh/