The Securities and Exchange Commission of Cambodia (SECC) has decided to allow stock brokers and underwriters to buy back shares from investors in order to cope with a dearth of buyers on the country’s young bourse.
The commission approved the proposal for so-called liquidity providers on Tuesday. Cambodia Securities Exchange spokesman Lamun Soleil said on Wednesday that a meeting would soon be held for interested brokers and underwriters to apply.
He said a paucity of trading on the bourse, which had listed four companies since opening in 2012, was leaving some buyers trying to sell their shares with no one to sell to.
“Our market does not have much trading, so this measure will help increase trading. They have to ensure the market always has orders to buy and sell, and the [liquidity providers] can sell and buy shares from investors who want to buy and sell.”
In theory, added liquidity helps to stabilize market prices, reduces trading costs and narrows the difference between bidding and asking prices. “We hope this mechanism will be helpful, but let’s wait and see,” Mr. Soleil said.