Lawrence Kook, director of Cambodia Derivatives Exchange and managing director of First Asia Merchants Bullion Ltd, at Yangon Stock Exchange on January 15 (Photo- Khine Kyaw, The Nation)
Lawrence Kook, director of Cambodia Derivatives Exchange and managing director of First Asia Merchants Bullion Ltd, at Yangon Stock Exchange on January 15 (Photo- Khine Kyaw, The Nation)

Bid to establish Myanmar derivatives market begins

Economy January 16, 2019 01:00

By KHINE KYAW
THE NATION
YANGON

4,066 Viewed

THOUGH Myanmar’s stock market is yet to be very active due to a lag in investor interest, another move is now under way to set up a derivatives market in the nation, according to a workshop held at the Yangon Stock Exchange (YSX) yesterday.



Min Htike Aung, managing director of New World Financial Group, said the firm is planning to establish a derivatives market in Myanmar in cooperation with the Finance Ministry, the regulator Securities and Exchange Commission of Myanmar (SECM), YSX and international partners including Cambodia Derivatives Exchange (CDX) and Hong Kong-based First Asia Merchants Bullion Ltd (also known as First Gold). The derivatives market will involve commercial activities in forex, commodities, real estate and gold markets, among others. 

“We will make efforts in all possible ways to make it happen. If we are able to make it, the forex market will definitely boom here in line with international standards, and thereby gold and commodities markets will substantially grow,” he said.

“To this end, we are tirelessly cooperating with our partners and relevant authorities. We will further strengthen our cooperation with the line ministry to work on setting regulations for this market.”

 According to Min Htike Aung, the market itself will create thousands of new jobs for Myanmar citizens, playing an active role in the nation’s sustained growth. 

In an effort to develop the derivatives exchange and financial market in Myanmar, the firm started talks with CDX and First Gold six months ago, and will sign a memorandum of understanding with the counterparts today.

Setting the rules 

“We are getting ready to set the rules and regulations in Myanmar [to establish the market]. Without specific rules and regulations in place, it is too risky for investors to be involved in derivatives trading. We will be making changes soon,” he said. 

He stressed that it is time to establish such an important market in Myanmar in order to catch up with other Asean countries.

“We can see derivative markets everywhere in Asean, except our country. It is very encouraging to see the success of a derivatives market in Cambodia, where there are much less population and lower gross domestic product than in our country. So, it should not take too long to establish this market here,” he said.

Lawrence Kook, director of CDX and managing director of First Gold, pledged to provide any possible assistance to make it a reality.

“We are here to introduce and promote the derivatives market in Myanmar, to discuss with the regulators and industry players in this market,” he said.

Kook stressed the importance of exploring possibilities to set regulations on derivatives trading in Myanmar.

“The derivatives market has a lot of benefits, and is easy to understand. If you learn how to use this investment tool (derivatives trading), it will definitely help Myanmar grow further by bringing more foreign direct investments,” he said.

Kook said derivatives trading would boost Myanmar’s trade with foreign countries. He urged that the country prepare well for risk management.

“For the risk management, it is super important for us to understand the risks of every single organisation. Be prepared for long-, short- and mid-term strategies,” he said.

“The risk tolerance level should be different according to age. Low risks, low returns. High risks, high returns. If there is anybody who promises you high returns with low risks, do not believe it because it does not make sense,” he added.

“In the financial market, traders often oversee risks. If you use this market as a way of gambling in the casino style, it is not healthy and does not promote the economy,” said Kook.