Government to warn ‘illegal’ futures brokers

The government is to issue a formal warning to “illegal” online futures trading companies to stop trading once offices reopen at the end of the Myanmar new year holidays today, according to U Maung Maung Thein, deputy minister for finance.

“They are not operating in accordance with related laws. And we are seriously afraid that people would be cheated. There is no regulator for futures exchanges. So if people have problems, they can’t sue anybody,” the deputy minister said in an interview with reporters.

According to an investigation by The Myanmar Times, five or six futures exchange brokerage companies operate in Myanmar and most have been established since around mid-2014. They say they provide a service to Myanmar clients to invest in futures exchanges of foreign countries.

Each company serves futures exchanges in individual countries, including New Zealand, Hong Kong, Taiwan and Indonesia. Futures trading is mostly conducted in contracts for commodities such as gold, oil and gas, and timber, as well as foreign currencies.

Experts have warned that online trading in futures contracts is gaining ground in Myanmar without proper regulation and that investors are not fully aware of the potential for large losses.

The deputy minister said the government would serve serious warning notices to the brokerage companies personally. If they did not then stop their business then the government would instruct police to launch criminal investigations and prosecute them, he said.

Futures trading is not provided for under the law in Myanmar which has only enacted the July 2013 securities exchange law. In the prohibition and punishment chapter of the law, section 22 states that no one may operate a business of a stock exchange without permission from the Security Exchange Commission Myanmar, which is chaired by U Maung Maung Thein.

Ma Myat Myat, assistant business manager of Asian E-Trade Consultant (ATC) which acts as a futures exchange broker for the New Zealand Futures Exchange, said the company had both a licence from Myanmar’s Directorate of Investment and Company Administration (DICA) and the recognition certificate from the New Zealand exchange.

Financial advisor Ko Mynn Nyi Nyi of Inter Pan Myanmar, a broker for Indonesia Futures Exchange, also said they had a licence from DICA since August 2014, and that their company provided good opportunities for Myanmar investors.

“Our parent company from Indonesia is 29 years old and is in the top three of ASEAN’s most profitable broker companies for clients,” he added.

The deputy director of DICA, Daw Nilar Mu, said the company licence issued by the department only applies to the use of the company name and is just a form of registration. These licences can be used to compete in tenders, she said. But she noted that such companies also require permission from relevant government organisations, in this case the finance ministry.

Ma Myat Myat from ATC brokerage said the company had made financial deposits with the government, but she did not say how much.

The deputy minister for finance rejected that. “If they give a deposit, I must know about that. But I have never heard about that.”

Two clients who invested through ATC, but asked not to be identified, told reporters they had been able to earn about US$2000 within two or three months. But Ma Myat Myat cautioned that some clients had lost all their investments, up to $10,000.

U Maung Maung Thein warned, “I want to give a message to the people not to give their trust easily and not to be greedy.” He said the ministry would warn the public about the illegal nature of futures trading companies.

Source: Myanmar Times

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