Cambodia Investment Review
The Securities and Exchange Regulator of Cambodia (SERC), established to regulate and develop the securities market, has been a pivotal force in fostering financial growth in the country. On June 26 ,2024 SERC unveiled its vision for the 2024-2028 period. The presentation, led by H.E. Sou Socheat, Delegate of the Royal Government in charge as Director-General of SERC, outlined strategic plans aimed at promoting growth and stability in Cambodia’s securities market.
“Our primary goal is to mobilize capital from public and securities investors to meet the financing or investment demands of Cambodia,” H.E. Sou Socheat emphasized. He highlighted SERC’s commitment to developing a robust securities market that can significantly contribute to Cambodia’s socio-economic development. This vision aligns with the broader Financial Sector Development Strategy (FSDS) 2016-2025, which aims to enhance both the banking and non-banking sectors.
Attracting More Company Listings To The CSX
A key component of SERC’s vision involves attracting more company listings to the Cambodia Securities Exchange (CSX). “We are introducing a risk management framework to supervise permitted securities exchange operators,” he explained. The transition to risk-based supervision is expected to improve compliance with corporate governance requirements among State-Owned Enterprises (SOEs). H.E. Sou Socheat stressed the importance of encouraging foreign portfolio investors to participate in the Cambodian securities market, adding, “We are committed to creating an environment that supports domestic savings institutions and promotes the development of a government bond market.”
The strategic plan includes developing a comprehensive legal and regulatory framework to support the growth of commodity futures, financial derivatives, and regulations related to securities financing and margin financing. “Adopting and promoting corporate governance practices is central to our efforts,” H.E. Sou Socheat noted. Furthermore, SERC aims to develop regulatory frameworks for digital assets, peer-to-peer financing, and crowdfunding. “Promoting sustainability disclosure and the development of regulations for FinTech in the securities sector are also high on our agenda,” he said.
To ensure a fair and orderly market, SERC plans to set up regulations to combat market abuse and implement an IT system for digital reporting and detecting such abuses. The development of a technology risk management and cybersecurity framework is also a priority. H.E. Sou Socheat emphasized the importance of these measures, stating, “By enhancing our supervisory capabilities, we aim to maintain investor confidence and protect their lawful rights.”
Regulations To Launch New Sustainable Financial Products
SERC’s vision includes substantial investments in capacity building and infrastructure. This involves developing the skills of SERC staff, strengthening internal systems to support electronic filing, and enhancing the infrastructure of trading and settlement systems. “Continued development of financial literacy and public awareness of FinTech in the securities sector is crucial for sustainable growth,” he stressed.
In addition to the core areas, SERC aims to reduce development barriers caused by dollarization and establish an Investor Protection Fund. Introducing medium-term budgeting for SERC is also part of the plan.
SERC’s vision includes adopting regulations to launch new sustainable financial products, such as Sustainability-Linked Bonds (SLBs) and Sustainable Responsible Investments (SRIs). The promotion of green, social, and sustainability bond listings is a significant focus area. H.E. Sou Socheat noted, “We are committed to promoting sustainability in the securities market, ensuring long-term growth and environmental responsibility.”
Experiment With Innovative Financial Products Or Services
SERC has established a Digital Securities Sandbox to experiment with innovative financial products or services, such as decentralized finance (DeFi), digital assets, and blockchain-based trading platforms. These innovations aim to enhance market liquidity, efficiency, and risk management. “We are targeting the development of Regulatory Technology (RegTech) and Supervisory Technology (SupTech) to support digital reporting, licensing applications, and corporate disclosures,” H.E. Sou Socheat explained. The goal is to achieve maturity across key thematic areas, including core market infrastructure, post-trade operations, and alternative funding platforms.
SERC is also working on drafting a 10-year Securities Market Development Master Plan. This plan will update the 5-year Institutional Development Plan and the 3-year Rolling Action Plan, sharpening the focus on developing the securities market in Cambodia. “Our vision for 2024-2028 and beyond is ambitious, but with strategic planning and execution, we are confident in our ability to achieve significant growth and stability in Cambodia’s securities market,” H.E. Sou Socheat concluded.
This detailed outlook underscores SERC’s dedication to fostering a dynamic and resilient securities market, positioning Cambodia as an attractive destination for investors and ensuring the sector’s sustainable development.
