Stock Market System

Dec. 2010

Cambodia Securities Exchange

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- Contents 1. Entrustment 2. Market Operation 3. Base Price 4. Daily Price Limit 5. Trade Execution 6. Others

1. Entrustment
Opening of Accounts
Opening a Trading Account
- When a customer intends to buy or sell an amount of stocks, then he/she should open an account first. - Following things recorded: Name, address, phone number, ID number, password nationality, investor classification, status of residency

Purpose of opening of an account

- To state entrustment conditions in writing
- To prevent the disputes that may arise later - To protect investors interests
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1. Entrustment
Opening of Accounts
How To Open
- An customer shall Visit head office or a branch of a securities firm Write down personal information in an application form Receive Service Agreement and read carefully Enter into the Agreement for opening a trading account Deposit cash or securities

Types of Accounts
- Customer account : On the basis of entrustment from a customer - Proprietary account : Securities firms own account
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1. Entrustment
Opening of Accounts
Service Agreement
- Matters relating to following items shall be included Complying with the relevant laws, sub-decrees, the regulations Refusal of an entrustment or any restriction imposed

Collection of good faith deposit and brokerage commissions

Measures to be taken in the case of settlement failures Collection of brokerage commission Other things the securities firm deems necessary

In Case of Establishing or Changing Service Agreement

- The Securities firm shall notify the CSX of such fact within 5 days before being effective
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1. Entrustment
Order
Definition

- An act of expressing the intentions of buying or selling securities in

the Market It is a way of receiving entrustment from an investor - Only Limit order can be used - Effective until being executed during the trading hours of the day

Method of placing orders

- By document, phone, fax, e-mail, pc

1. Entrustment
Order
Input of Order Information
- No. of account, name of an Issue, quantity, price, buy/sell, customer account/own account, members ID, investor classification code

Example
No. of account
123456 Member ID 01

Issue
ABC

Quantity
100

Price
5.20

Buy/Sell
Sell

Investor classification code 101020

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Customer/Member account 0 (customer) 1 (member)

1. Entrustment
Good Faith Deposit (Margin)
Definition
- Good faith deposit is cash or securities deposit to assure the fulfillment of settlement - It is a kind of collateral to be used in case of settlement failure, and allows the securities firm to recover the loss

When To Deposit and How Much

- When placing orders, customers shall deposit cash (in case of placing a buying order), or securities (in case of placing a selling order) - 100 percent of total entrustment value - Margin can not be withdrawn
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1. Entrustment
Error Collection
Correction of Error Trades
- A member firm shall collect an error trade - Input the error trades into the member system and transmit into the CSX system - Record details and causes, and maintain it

Example
Account Number Origina l Correction 123456 123456 Issue Quantity 100 100
8

Price 5.20 5.20

Bid/Offer 0 (Bid) 0 (Bid) 1 (Offer)

Account 0 (Client) 1 (Member)

ABC
ABC

1. Entrustment
Clearing
Clearing procedures shall be completed by the Exchange How to Clear
- By netting securities and payment amounts of same date per member

Example
Name of Issues
A Bank B Electricity

Buying
$ 1,000 $ 500

Selling
$ 1,500 $ 1,200

Netting
- $ 500 - $700

C Telecom

$ 800

+$ 800

Total

$ 2,300
9

2,700

- $400

1. Entrustment
Settlement
Settlement date
- Between member and customers : T+2, 10:00 - Between members : T+2, 14:00

Responsibility of Settlement
- Member firms shall be responsible for settlement traded in the CSX market.

How to Settle
- Buying position : Pay or receive cash on members bank account - Selling position : The method of book-keeping transfer

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1. Entrustment
Settlement
Measures In Case of Settlement Failures
- Member side * Settle the concerned trade with own cash/securities * Supplement the shortage by disposing cash/securities

* Reject or restrict the customers order

- Exchange side * Settle cash/securities in behalf of concerned member

* Suspend trading of concerned member for a fixed period of time

* Use Joint-Venture Compensation Fund * Exercise the claim of reimbursement against the member
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2. Market Operation

Trading Hours
- From 08:00 to 11:30 - Trade execution shall be occurred 2 times a day, 9:00 and 11:30 Order Receiving
08:00 Market Open

Order Receiving
11:30 Matching (Closing Price)

09:00 Matching (Opening Price)

Holiday
- Public holidays, Saturday, 3 days of end of year(Dec.29, 30, and 31)

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2. Market Operation

Trading Unit
- 1 share

Example

Price Unit (Tick Size)

Correct or Wrong

- 3 steps : Less than $10 1 cent : $ 10 ~ $100 5 cents

0.12 1.251 7.23 16.10 124.15

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0.17 1.23 7.25

: Greater than 100 10 cents

16.52 124.70

3. Base Price
In Principle
- Previous days closing price (if not available, last price)

Exceptions
Stock dividend (Bonus Issues)
- Market capitalization (closing price x No. of shares) before dividend / No. of shares after dividend

Capital Increase
- (Total of market capitalization before capital increase + Issuing price

of stocks x No. of shares allocated to shareholders) / No. of shares

after capital increase

Stock split : Previous days closing price x ratio

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3. Base Price
Normal Case
Base Price = Previous days closing price If not available, closing price of last day

Stock dividend
day
D-1 (before dividend)
D (after dividend) Base Price = 6.82
-Calculation : (7,5020,000)/22,000 = 6.818181

Price
7.50 6.82

No. of issues
20,000 22,000

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3. Base Price
Capital Increase
day
D-1 D

Price
12.50 11.34

No. of issues
20,000
30,000

No. of new issued

10,000

Price of issues
9.00

Base Price = 11.34

-Calculation : (12.5020,000+10,0009.00)/30,000 = 11.333

Stock-split
day
D-1 D

Price
7.50 0.75

No. of issues
2,000 20,000

Base Price = 0.75

-Calculation : (7.500.1) = 0.75 16

3. Base Price
IPO Price
- First trading price shall be from 90% to 200% of the IPO price

- Orders shall be received from 8:00 a.m. to 9:00 a.m

Ask
Max (200%)

Price
38.00 :

Bid

IPO price
: 19.00

Upper limit (5%)

22.05
: 21.00 19.95 19.00 : 17.10
17

Initial Price Lower limit(5%)

Min(90%)

4. Daily Price Limit

In Principle
- Daily price change limit : Base price 5% of the base price - But in case base price is less than 20 cents : 1cent

Exceptions
- Market is reopened after being closed for a long period - Issues for liquidation trade - Others

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4. Daily Price Limit

Example1
<Case 1 : base price 9.00> Ask
upper
+5%

<Case 2 : base price 3.25> Ask

upper
+5%

Price : 9.45 : :

Bid

Price

Bid

:
3.41 : : 3.25 base
-5%

9.00
: : 8.55 :
9.005% = 0.45

base
-5%

:
: 3.09 :
3.255% = 0.1625 0.16 19

lower

lower

4. Daily Price Limit

Example2
<Case 3 : base price 23.00> Ask
upper
+5%

<Case 4 : base price 62.50> Ask

upper
+5%

Price

Bid

Price

Bid

:
24.15 : : 23.00 base
-5%

:
65.60 : : 62.50 base
-5%

:
: 21.85 :
23.005% = 1.15 20

:
: 59.40 :
62.505% = 3.125 3.10

lower

lower

4. Daily Price Limit

Example3
<Case 5 : base price 0.20> Ask
upper
+5%

<Case 6 : base price 0.19> Ask

upper
+5%

Price

Bid

Price

Bid

:
0.21 : : 0.20 base
-5%

:
0.20 : : 0.19 base
-5%

:
: 0.19 :
0.205% = 0.01 21

:
: 0.18 :
0.195% = 0.0095 0.01

lower

lower

5. Trade Execution
Priority of Bid/Offer Orders
- Lower offers (higher bids) have a priority over higher offers (lower bids) - In case of same price orders, time priority adapted

Example
Price priority () Time priority (, )
Ask Price
:

Bid

20.30
20.25

20 (the highest bid)

200 300

:
:

20.20
20.15

:
:

80

100

20.10
20.05 :
22

(the lowest ask) 20

5. Trade Execution
Single Matched Price
Matched Price
- The price where the aggregated quantity of offer orders are matched with aggregated quantity of bid orders

Above or Below the Matched Price : Price Priority

- Offer orders below matched price and bid orders above matched price
shall be matched

At the Matched Price : Time Priority

- Total quantity of either bid or offer order - More than 1 share of the other party
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5. Trade Execution
Example1 Ask Price 15.40 15.35 15.30
2,000 1,000

Bid
1.000 300 200 300

300 200

100

15.25 15.20

100

200

500

200
500 300

15.15
15.10 15.05

Matched Price : $15.25, matched Quantity : 2,100 shares 24

5. Trade Execution
Example2 Ask Price 6.35
2,000 300 2,000 700 500 400 200 200 500 400 400 200 1,000
100 100

Bid
1,200 700 300 200 100 100 300 300

6.31 6.28 6.26 6.25 6.24 6.23 6.20

100

200

Matched Price : $6.26, matched Quantity : 2,900 shares 25

5. Trade Execution
Two or More Matched Price
Matched Price
- The price that is equal to the latest market - The price that is closest to the latest market price

Example
Ask Price 20.65 20.20 20.10 Last Price 15 30 20.05 20.00 19.95
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Bid 25 20

Ask

Price 12.35 12.30

Bid 100 100

20

12.10 12.00

150 50

11.85 11.80

5. Trade Execution
Ask Price 20.50 20.30 20.15 Bid 100 100 200 Ask Price 9.10 9.09 9.06 Bid 10 10 10

Last Price 150

250 Ask

20.05 20.00 19.95 Price 5.24 5.23 5.22 5.20 Bid 100 100 150

9.04 1
19 Ask 9.03 9.02 Price 10.20 10.15 10.10 10.05 150

10

Bid 100 100

50 300 500
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300 200 150

200

5.19
5.18

10.00
9.95

200

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5. Trade Execution
Simultaneous Order
- Orders treated equally in the process of matching, irrespective of sequence of time In case where matched price is determined at the upper price limit : the upper bid In case where matched price is determined at the lower price limit : the lower offer
Ask
5,000 3,500 2,500 1,000 (12,000)

Example
Bid
13,000 500 1,000 1,000 2,000 15,000 (13,000)
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Price
20.20

Ask

Price
20.20

Bid
8,000 5,000 1,000

20.15
20.10 20.00 total

20.15
20.10 20.00 total

(15,000)

(14,000)

: upper or lower limit

5. Trade Execution
Quantity Allocation
- 100 shares 500 1,000 1/2 of the residual residual quantity Order
Ask
4,000 1,500 600 1,700 1,500 (6,100) (3,200)

Price
20.20 20.15 20.10 20.05 20.00 500 700 400

Bid
1,000 200 10,000 5,000

1,300 1,000
800 700

(2,300)
(800) (700) 13,100

total
2nd (500) 500 500 500
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16,200

Matching

1st (100)

3rd (1,000) 1,000 1,000 400 -

4th (1/2) 4,200 1,700 -

(rest)

5th

traded

order(10,000) 100 order(5,000) 100 order(1,000) 100 order(200)

100

2,800 -

8,600 3,300 1,000 200

100

6. Others
Market Management
Market Agent
- Members shall appoint more than 2 market agents

- Market agents shall work on the trading floor

- No one except market agent make use the member system and be engaged in trading and settlement

Publication of Market Orders

- Opening price and closing price, base price - Trading volume and trading value

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6. Others
Special Quotation
- Best offer quotation (lower than base price) or best bid quotation (higher than base price), in cases of not executed until the market closing

Example
Ask 5,000 Price 15.30 Bid Ask Price 15.30 2,000 Bid

15.25 2,500
1,000 15.20 15.15 15.10 15.05
: Base Price 31

15.25
15.20 15.15

3,000

15.10 15.05

1,000

6. Others
Market Data
Name of Listed
A Bank B Electricity C Telecom D Construction E Trading Co. F Computer G Air Total/Ave.

Closing Price
14.55 8.26 2.33 7.91 12.15 6.32 125.30 25.26

Changes
0.40

Trading Volume
52,500 15,264 128,630 66,851 12,870 7,125 283,240

Trading Value
763,875.00 126,080.64 299,707.90 528,791.41 156,370.50 45,030.00 1,919,855.45

0.12
0.03

0.23
0.35

0.18
0.07
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6. Others
Others
System
- Exchange system : Operated by the Exchange for the purpose of intermediating execution of trades - Member system : Supported by the Exchange to transmit orders from members to the Exchange system

Commission
- 2~3% of total value from a buyer and a seller

Trading suspension
- Prices or trading volumes are expected to fluctuate due to rumors - Timely trade execution is due to the excessive influx of orders
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