Positive move of derivatives after trading volumes rise

Although it is still in its infancy, the derivative market is moving forward positively as traders become more interested in, and acquainted with the market, a senior official said last week.

Sou Socheat, director-general of the Securities Exchange Commission of Cambodia (SECC), the Kingdom’s securities regulator, said the market’s trading volume has increased remarkably in recent years.

He said in 2019, trading volume reached $120 million when in 2018 it was just $84 million. “This year, we expect that the market’s trading volume will go up to around $200 million,” he said, adding the forex derivatives show great liquidity, allowing investors to easily trade 24 hours a day.

“We had investors conducting derivative trading before the market was not managed by a competent authority, but we have now prepared a proper system in managing trading activity in the market. That is to say, the market is growing rapidly,” he explained.

He said the SECC iss committed to promoting the market further, but, at the same time, warned  pride comes before a fall.

“While encouraging investors to invest in the market, we, as regulator, and our licensed operators, have to educate them [investors] about understanding the risks involved. Forex [foreign exchange] poses higher risks when compared with stocks or bonds,” he pointed out.

In other words, values can go up and down more wildly and quickly: Buyer beware.

He said some investors think that the derivative market has a high risk but somehow it brings in more profits, which simply translated means “high risk, high return”.

“What we have been doing is keeping investors informed about the risk in the market.”

Educating and fulfilling the thirst for investment knowledge among the public is considered to be key to the sustainability of the derivatives market.

Lawrence Kook, director of Cambodian Derivatives Exchange (CDX), said the derivatives market in the Kingdom is getting bigger and bigger annually. He also believes awareness among the industry’s players has increased notably in recent years.

“We can see the fulfillment of our mission to educate and guide Cambodian people towards this industry in the right way,” he said.

Last week, the CDX and the SECC successfully completed a roadshow in all cities and provinces of Cambodia, aimed at educating thousands of participants and exposing the significance of the derivatives market all over the country.

“Doing derivative trading is one thing, but we are aiming higher than that. We want to activate the economy of this country by having a strong financial sector, a strong backbone,” Kook said.(This news came from Khmertimes.com)