Cambodia to use local currency for stock market

PHNOM PENH, March 12 (Reuters) - Cambodia's new stock exchange will quote share prices in the local riel currency (pictured), despite pleas from foreign investors who want the dollar used on the long-delayed bourse.

The Securities and Exchange Commission of Cambodia (SECC) said all stock quotations on the Cambodia Securities Exchange (CSX) must be in riel only. It is due to commence trading in July, but investors are braced for more bureaucratic delays.

The bulk of Cambodia's financial transactions are in dollars, which make up 90 percent of deposits and credits in the banking system in what is one of Asia's poorest countries.

The SECC says the government and central bank want Cambodia to be more independent in terms of its currency and is seeking to increase its use.

Foreign investors have urged the SECC to use dollars, at least in the beginning, because use of the riel would make risk harder to assess.

The commission said, however, that although riel would be quoted in the primary and secondary markets, dollar transactions would be permitted initially to settle payments, with the consent of the parties involved.

"The resettlement in dollar is permitted for use for the first three years when the securities market is formed," the SECC said in a statement, adding that the decision to use the riel followed a two-year study in which private companies, international financial institutions, academics and the public were consulted.

At least 10 private sector companies want to list on Cambodia's long-awaited bourse. Three state-owned companies, the Phnom Penh Water Supply Authority, Telecom Cambodia and Sihanoukville Autonomous Port, are also expected to list.

The SECC has granted licences to 15 securities firms to operate on the CSX -- seven underwriters, four brokers, two investment advisers and two dealers -- most of which are either partly or wholly owned by Malaysian, Vietnamese, Japanese, South Korean or U.S. companies.

Finance Minister Keat Chhon last week urged more private companies to seek a listing so they could raise funds to expand. The government is also considering tax incentives for firms that issue public shares. (Reporting by Prak Chan Thul; Editing by Martin Petty)