Firms will now be able to sell stock in the primary market after the Securities Exchange Commission of Cambodia (SECC) this week approved the activities of securities selling firms and agents, but demanded that they operate under a license.
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According to some industry insiders, the move will increase costs for existing brokerage firms.
On a statement Tuesday, SECC said that now all qualified firms can apply for a license to operate as “securities selling firms” and “securities selling agents”.
Prom Visoth, president and CEO of Acleda Securities, told Khmer Times that before this new move securities brokerage firms could only operate in the secondary market, such as the stock exchange or the bond market.
Now, he explained, they can also access the primary market, but they need to apply for a license.
The primary market is the part of the capital market that deals with issuing new securities. In a primary market, companies, governments or public sector institutions can raise funds through bond issues and corporations can raise capital through the sale of new stock through an initial public offering (IPO).
“For example, now if Acleda Securities wants to sell securities in the primary market, we need to apply for permission from the regulator, which will incur additional expenses, including the application fee, as well as the human resources needed to review the application and renew it annually,” he said.
“It is definitely an extra burden because we now need to spend more financial and human resources to comply with regulation,” he said, adding that he believed it was too early to issue this regulation because the number of companies listed in the exchange as well as the amounts traded are “too small”.
He explained that SECC’s intentions with the new regulation are to enhance control of the securities trading business in the country and to increase transparency and accountability, but said that at this point in the exchange’s life it will just serve to increase costs for securities firms.
CSX was launched in 2012 and has only five companies listed. There are six securities dealers and three securities brokerage firms.
Mr Visoth said to lure more companies into the stock exchange, the regulator should offer them tax incentives. He said SECC should also do more to educate the public about securities investments.
CSX closed yesterday at 339.33 riel per share, down 7.39 riel. Total trade volume equalled 6,909 shares.