Section 1: Foundation in Securities Market and Trading

 

1. What and why a securities market?
2. What is a stock?
3. What are the benefits of trading in stock?
4. What are the risks involved in stock trading?
5. What is a bond?
6. What is the difference between investing in stock and in bond?

 

Section 2: New Trader


1. When should I start trading?

2. Do I have to meet any qualification to trade?

3. What is the minimum capital needed to start trading?

4. How can I buy/sell a stock/bond?

5. Why do I need a broker for my trading?

6. Which securities firm should I choose to be my broker?

7. How can I buy shares at IPO?

 

 

Section 3: CSX’s General Operations

 

1. What are the trading hours at CSX?

2. What is the difference between limit order and market order?

3. When is a trade settled in CSX?

4. Where are my securities stored? Is it really safe?

 

 

Section 4: Stock Market

 

1. What if my order wrongly placed by the broker, has gone executed?

2. What is the difference between trading of stocks listed on the Main Board and on the Growth Board?

3. What is Liquidity Provider?

 

 

Section 5: Bond Market

 

1. Is a different trading account required to buy/sell bond?

2. What are the order types applicable for bond market?

3. Is daily price limit applicable for bond trading?

4. Do the bond prices include accrued interest?

5. Is the Negotiated Trading Method (NTM) for bond and stock the same?

6. Is the Auction Trading Method (ATM) for bond and stock also identical?

 

 

Section 6: Listed Companies’ Information and Market Data

 

1. What are the market data and listed company’s information useful for investors’ investment decision?

2. How to access the market data?

3. How to obtain the listed companies’ information?

4. What is the index of CSX? Does the Growth Board have an index?

 

_________________________________________________________________________________________________________________

 

Section 1: Foundation in Securities Market and Trading

 

1.  What and why a securities market?

 

Securities market is a market where securities like stock and bond are bought and sold.

 

Securities market plays an important role in a country’s economy by allowing corporations, state owed enterprises and government to raise funds directly from the public to finance their business expansion or infrastructure development. On the other hand, the people who have excess of funds remaining from spending, have choice to make diversified investments or even savings (with low-risk securities) in the securities market. When money flows efficiently from those who have it to those who need it, the economic activities of production and trade will accordingly prosper and jobs and wealth are created.

 

 2.  What is a stock?

 

Stock is a type of equity securities that represents the ownership in a corporation and a claim on part of the company’s assets and earnings depending on the proportion of shares a person holds.

 

For example: Mr. Chan holds 1,000 shares of PWSA stock. Then the company announces a cash dividend of 250 KHR/share. Therefore, the amount of cash dividend for which Mr. Chan has the rightful claim, shall be 250,000 KHR.

 

3.  What are the benefits of trading in stock?

 

Stock trading offers investors various advantages as follows:

 

 (a)  Investment opportunity and return

Instead of or in addition to running their own business, stock holding offers investors the opportunity to participate in a business where no specific expertise and experiences is needed or close monitoring is required. Meanwhile, the return from trading and holding a stock could be significant generating from dividend and capital gain.

 

(b)  Affordability for small investors

The stock market allows investors with even small amount of money to (partially) own a big company and experience the return like other high net worth individuals and institutions based on their holding proportion.    

 

(c)  Tax incentives

  • No stamp duty levied on ownership transfer resulted from stock trading;
  • No capital gain tax;
  • No dividend tax for Cambodian residents, and 7% (of full 14%) dividend tax for non-residents

 

(d)  Diversified Investment and additional return

Besides your main source of revenue like salary or profit from businesses, and your other additional revenues for example in the forms of interests from fixed deposit or renting or gain from real-estate, you may invest in stock market to diversify your investment and obtain additional return. In addition, the brokerage commission is as low as around 0.5% of your trading value.

 

4. What are the risks involved in stock trading?

 

Stock trading consists of risks that may affect the stock price to decrease or to be highly volatile.

 

We can classify those risks into three main categories as follows:

 

  • Systematic Risk or Market Risk is the uncertainty happening to the entire market which cannot be diversified away such as: economic risk, inflation risk, political risk, interest rate risk, etc.

 

  • Unsystematic Risk is the uncertainty happening to a specific company or industry which can be reduced through diversification. Such risks can be company insolvency risk, internal accounting fraud, insider trading activity, etc.

 

  • Liquidity Risk refers to risk that the buyers and sellers are unable to find one another on a timely basis to trade at the fair price, due to lack of liquidity in its given market.

 

5.  What is a bond?

Bond is a type of debt securities that represents an amount of money which an investor lends to an issuer, which may be a corporation, state-owned enterprise or government. The investor shall receive an amount of interest from the issuer periodically and the whole principal back at maturity.   

 

6.  What is the difference between investing in stock and in bond?

 

 

Bond

<Stock

  • Becoming a creditor
  • Becoming an owner
  • Higher claim on assets
  • Lower claim on assets
  • Consisting of maturity
  • Unlimited holding period unless the company is liquidated
  • Stable and regular interest income to be paid by issuer
  • Dividend payment based on company policy and performance
  • Lower price volatility
  • Higher market volatility 
  • Typically illiquid
  • More liquid
  • Minimum trading unit = 1 unit of bond

           (with standard face value of 100,000KHR)

  • Minimum trading unit = 1 share

_________________________________________________________________________________________________________________

 

Section 2: New Trader

 

1.  When should I start trading?

 

There is no specific time frame for investor to start trading, but you must have the national ID card (for Cambodian national) or passport (for foreigner) to open a trading account. You may start investing when you think you can afford the investment and have sufficient knowledge and skills to trade and bear the potential risks.  

 

2.  Do I have to meet any qualification to trade?

 

You are not required to get through any qualification assessment process to trade the stocks listed in CSX. However, you should at least have some basic knowledge in financial investment and securities trading as well as understanding of possible risks to ensure proper investment decision making.      

 

3.  What is the minimum capital needed to start trading?

 

CSX does not specify any minimum investing capital. However, the minimum trading unit of stock and bond on the CSX are respectively 1 share and 1 unit of bond. And you should also be aware of minimum trading fee imposed by some securities firms.

 

4.  How can I buy/sell a stock/bond?

 

Once opened a trading account with a securities firm (List of CSX's Members), you can instruct that broker to place a buy/sell order for you through any of the following means:

  • Written document
  • Telephone
  • Email
  • Other electronic media suggested by your broker

 

When the Mobile Trading System (MTS) is available, you may ask for this facility from your broker, and therefore you may place orders by yourself through that system.

 

5.  Why do I need a broker for my trading?

 

Because only licensed securities firms, who are the CSX’s members (List of CSX's Members), are allowed to have (costly) system connection with the CSX. All investors have to open a trading account at a CSX’s member and have their orders placed through that member. By having a broker by your side, you may also seek their investment advice and other personal services.

By the way, when you can place orders by yourself via the Mobile Trading System (MTS) to CSX’s trading system, your orders will of course pass through the broker system before reaching the CSX’s system.   

6.  Which securities firm should I choose to be my broker?

Currently, there are 10 securities firms who are licensed by SECC and registered as the CSX’s members to operate as securities underwriter, dealer, and broker. A list of their name and contact details can be found in the CSX’s website (List of CSX's Members).

 

Of course, you consider choosing a broker firm based on such criteria as varieties of service offered, customer service rendered and brokerage commission fee.

 

7.  How can I buy shares at IPO?

 

There are 2 steps in IPO for investors to participate in: Book-Building and Subscription. Book-building is the process of groping for a market price from public investors in the primary market (IPO). Investors will be requested to decide on a price within a predetermined range, and then on a quantity of shares to subscribe for. In this step, investors will be required to deposit 10% of the decided value (price x quantity). A few to several days after book-building period, will be announced a stock price which was determined using weighted average formula based on all the prices and quantities information collected.

 

To buy shares at IPO, you may skip the book-building process, but must subscribe for shares in the subscription process at the price determined at the book-building process. However, the book-building successful investors (who submitted a price higher or equal to the announced price) have advantage of getting higher amount of shares. Once the IPO shares are officially allocated, the investors will have to pay full 100% for the shares successfully subscribed.

 

To participate in any of the processes, investors are to go to their relevant broker for advice and administrative work.

 

_________________________________________________________________________________________________________________

 

Section 3: CSX’s General Operations

 

1.  What are the trading hours at CSX?

 

For Auction Trading Method (ATM), the order receiving time shall be from 08:00 am to 11:30 am but the trading starts from 09:00 am to 11:00 am and once again at 11:30 am before closing the market.

 

For Negotiated Trading Method (NTM), the trading hours shall be from 09:00 am to 11:30 am.

 

2.  What is the difference between limit order and market order?

 

Limit Order

Market Order

  • To ensure a trade execution at a predetermined price or a better price (i.e. price first, execution after)
  • To immediately sell or buy a stock at the best available price (i.e. execution first, price after)
  • Having lower price priority than market order
  • Having higher price priority than limit order
  • May take long time to execute, or not execute at all
  • Faster to execute
  • Trading price is confidently controlled
  • Trading price may be too low for seller or too high for buyer
  • Better for use in less liquid market where bid-ask spread is wide
  • Better for use for quick entry or exit of the market

 

3.  When is a trade settled in CSX?

 

A trade shall be settled around 08:30am on T+2 (two working days after the trading day). However, the cash and securities may be effectively credited to your account by 10h30am.

 

However, during the 2 days between trade and settlement, you are allowed to use the securities (cash) to be received from a purchase (sale) transaction to further trade immediately without having to wait until T+2 day.

 

4.  Where are my securities stored? Is it really safe?

 

All securities listed on the CSX are stored in scripless form in the securities depository system of CSX, where the safety and security of the information are highly ensured. It’s just similar to your money deposited in a bank where your money ownership information is secured, except that you cannot withdraw your securities in paper form. Ownership transfer will be done via the book-entry system, similar to money transfer in a bank.

 

_________________________________________________________________________________________________________________

 

Section 4: Stock Market

 

1.  What if my order wrongly placed by the broker, has gone executed?

 

Chances are that either the broker compensates you the different error amount of cash outside the market system, or the broker takes the responsibility of different error amount of securities into its own account. With the latter option, your broker only has time to process until the next trading day by noon.

 

2.  What is the difference between trading of stocks listed on the Main Board and on the Growth Board?

 

Stock trading on the Main Board and on the Growth Board follows the same mechanism and procedures, including common trading hours, tick size, minimum trading unit, daily price limit, and trading methods.

 

3.  What is Liquidity Provider?

 

Liquidity Provider (LP) is a CSX’s member that has accepted tasks to promote liquidity of a selected stock by quickly reducing the bid-ask spread to 10 tick-sizes or lower and then doing market making with public investors with the minimum volume of 100 shares. As observing, stocks covered by LP tend to have more trading activities and liquidity than other stocks.

 

_________________________________________________________________________________________________________________

 

Section 5: Bond Market

 

1.  Is a different trading account required to buy/sell bond?

 

To trade bond on CSX, investors are not required to have a different account from the one for trading stock.

 

2.  What are the order types applicable for bond market?

 

Only Limit Order and Negotiated Order are allowed to trade bond on CSX; Market Order is not allowed.

 

3.  Is daily price limit applicable for bond trading?

 

Daily price limit is not applicable for bond trading on CSX.

 

4.  Do the bond prices include accrued interest?

 

Bond price is quoted and traded in dirty price, which includes accrued interest.

 

5.  Is the Negotiated Trading Method (NTM) for bond and stock the same?

 

Most features of stock and bond trading through NTM are identical, including trading hours, price unit or tick size, no maximum order, no daily price limit, no order correction and error trade correction. However, there is one difference – minimum order of 1 unit for bond, but 50,000 shares or 200,000,000 KHR (whichever is lower) for stock.

 

6.  Is the Auction Trading Method (ATM) for bond and stock also identical?

 

The principles of matching bond and stock shall apply the same rules governing ATM as stipulated in the Operating Rules of Securities Market of the Cambodia Securities Exchange, except when there are two or more matching prices in single-price auction of bond, the trading price shall be the arithmetic average of the highest and lowest matching prices. In case the calculated price falls short of the price unit, such price shall be rounded up to the price unit.

 

Also, the minimum order quantity of bond and stock is the same (1 unit of bond/stock). But the maximum order quantity of bond is 10,000 units while it has none for stock.

 

_________________________________________________________________________________________________________________

 

Section 6: Listed Companies’ Information and Market Data

 

1.  What are the market data and listed company’s information useful for investors’ investment decision?

 

  • Market data refers to all the data related to prices and trading of securities on the CSX, which include prices, change, %change, volume, value, index information, etc.

 

  • Listed company’s information refers to the information of the past and current situation and performance of the company, which allow investors to predict the future of the company, and thus to accordingly make investment decision. The company information includes company’s profile, financial statements, corporate disclosures, management and main shareholders information, dividend policy, business plan, management’s comments on the company, etc.

 

2.  How to access the market data?

 

The CSX market data is available to the public in the Market Data section on our website.  As current investors, you can access the real-time data by logging into the Market Information (upper right side of the CSX’s homepage), using the User ID freely provided by your broker.

 

3.  How to obtain the listed companies’ information?

 

The listed companies’ information is accessible to the public investors via the following channels:

 

 

  • Annual STOCKINFO booklet prepared and published by CSX in hard copies, and also in soft on CSX’s website, Education section.

 

  • Respective listed companies’ website.

 

Investors may also subscribe to the CSX’s website to get alerted emails about the latest information made public by the listed companies and the CSX, and may follow on CSX’s Facebook page to get various information of the CSX’s events and activities.

 

4.  What is the index of CSX? Does the Growth Board have an index?

 

CSX Index is a composite index that represents the movement of share prices of all stocks listed on the CSX. It is calculated by using market capitalization weighted average formula. For details, please visit Index section.

Currently, CSX Index is the sole index of the CSX. There is no index representing the Growth Board.