Cambodia Securities Exchange (CSX) has agreed to renew the “Liquidity Provider” (LP) status of Yuanta Securities (Cambodia) for the common stock Phnom Penh Autonomous Port (PPAP), according to an official announcement yesterday.
The statement said the renewal will be valid for two years starting from Dec 21 this year with the exchange noting that Yuanta Securities shall continue performing its activities under the Operating Rules of Securities Liquidity Providing (ORSLP) of the CSX.
PPAP Deputy Director-General Hei Phanin said, “PPAP and Yuanta Securities have worked together smoothly and successfully since the beginning of PPAP’s IPO so this news of renewal is very much welcomed.”
“We are hopeful that the market will continue to improve, once the economy recovers post pandemic, as investors become better informed, and more companies list on the stock market,” she added.
The renewal comes after SBI Royal Securities Plc, which was the LP for Sihanoukville Autonomous Port (PAS), had its licence suspended in May because, according to the CSX, the company failed to fulfil its obligations as set forth in the ORSLP.
CSX Chief Operations Officer Ha Jong Weon said as an exchange, it would be good if more member firms were willing to be LPs for stocks.
He added that “In regards to SBI Royal Securities Plc its LP membership for PAS remains under suspension. The company needs to file a request to the CSX with proof of its ability to comply with all of its LP-related obligations if it wishes to continue the function.”
Khmer Times contacted SBI Royal Securities Plc yesterday, but was not provided with further details in regards to if, or when they would seek to reapply for their LP licence.
According to the exchange, LPs accept tasks to promote the liquidity of a selected stock by quickly reducing the bid-ask spread to 10 tick-sizes or lower and then engaging in “market-making” with public investors with minimum purchase volumes of 100 shares.
The programme’s goal is to ensure the order book always has bids and ask orders standing by, so investors always can find buyers and sellers in the market. In addition, the bid-ask spread is reduced to a low level so investors find it less costly to trade.
Stocks covered by LPs tend to have more trading activity and liquidity than other stocks, the exchange added.
There are currently only two LPs now in the exchange. The first LP was Golden Fortune Securities Plc, which was approved to act as an LP in 2016 for the Phnom Penh Water Supply Authority (PWSA).
According to the exchange, LP performances will be assessed monthly based on three criteria: timely order placement (within the five minutes from the occurrence of the spread greater than 10 tick-sizes), spread improvement (lower than 10 tick-sizes) and trade contribution (liquidity provider trading value as compared with the total trading value of the covered stock).