SERC launches online trading account opening for derivatives

The Securities and Exchange Regulator of Cambodia of the Ministry of Economy and Finance has set procedures of application for derivatives brokerage firms to follow. KT/Khem Sovannara

The Securities and Exchange Regulator of Cambodia (SERC) of the Ministry of Economy and Finance (MEF) on Monday released a set of guidelines on online opening trading accounts online for derivatives to keep the implementation of existing applicable laws and identify traders amid market development in the country.

SERC has set procedures of application for derivatives brokerage firms to follow if they wish to use the online system of opening derivatives trading accounts for their investors by fulfilling forms to be submitted with enclosed documents determined by the regulator that would visit the firms’ operations offices and check the system obviously.

SERC also will issue a written notification that would specify whether it approves or not the applications submitted by derivatives brokerage firms based on the check-and-balance principles, relevant regulations and requirements set by the regulator. SERC requires brokerage firms to develop online derivatives trading account opening systems themselves or have the system developed by an information technology supplier licensed by SERC.

SERC also requires the firms to have a guidebook on the usage of the system and online mechanisms and procedures in fulfilling their legal obligations in identifying their customers, explaining the details of procedures of depositing, transferring and paying cash to their customers in accordance with regulations, guidelines or requirements by SERC.

Sou Socheat, Director General of SERC, told Khmer Times yesterday that the set of guidelines has been issued also to implement the Electronic-Know Your Customer (e-KYC) system—a technology that enables an organisation to digitally verify customer documents against a previously verified database. MEF and the National Bank of Cambodia (NBC) have reached a deal on e-KYC cooperation to enhance the digital verification of customer documents in the country.

“These guidelines are for the implementation because there must be a core principle to confirm that opening the trading account online is possible but it must be done with submitted documents required by enacted regulations and what we called KYC rules, which means they can open accounts without a face-to-face meeting, but they must submit required documents,” Socheat said.

SERC will work with the International Finance Corporation (IFC) this year to develop Cambodia’s derivatives market further in line with an international standard, according to Socheat, adding that the regulator has also been working on the latest update of the number of investors in derivatives and derivatives brokerages that will be released shortly.

The guidelines also state that brokerage firms also need to prepare procedures and mechanisms in the online system that explain the meanings and set up agreements with their customers who need to claim that they have to take risks in trading derivatives in the market. Those firms also need to develop online procedures and mechanisms for checking, verifying and approving the applications for opening accounts by their customers.

They also need to have strategies to control and maintain cybersecurity that prevents cybercrimes with prompt responses and protections of the information technology systems, network infrastructures, operations and other applications from all forms of hacking and attacks, especially through the internet.

Derivatives brokerage firms have to pay 20,000 riels per application and 400,000 riels for assessment of the application for a request for using the online opening derivatives trading account, but 200,000 riels for a request for changing or modifying a section or function of the system. However, using the system by derivatives brokerage firms may be stopped by SERC if they do not apply these guidelines, regulations and instructions by SERC.

Source: Kang Sothear / Khmer Times