Market infrastructure - Thailand
Institutions and organisation
The SET is Thailand's main exchange, where trading started on 30 April 1975. The SET is a non-profit organisation and, as a government agency, is funded out of the country's annual budget. Operations are performed under the regulatory framework of the Securities and Exchange Act (SEA).
Trading is conducted on four separate boards:
Trades in at least one board lot with a volume of less than one million shares and a value of less than THB 3 million.
Trades in odd lots, government bonds, convertible and non-convertible debentures. An odd lot is defined as less than one board lot, less than THB 10 million in market value or less than 10% of the total par value of such securities.
Trades in securities held by foreigners.
|Big Lot Board|
Trades of a value greater than THB 3 million or of a minimum volume of one million shares.
Only member firms of the SET are authorised to buy or sell securities on the exchange. Membership is limited to companies that have obtained a securities licence from the Ministry of Finance, after recommendation from the Securities and Exchange Commission, to engage in the securities business as stockbrokers. Before obtaining full membership status, the SET’s board of directors must give approval to these companies.
The Stock Exchange of Thailand (SET) officially launched the Bond Electronic Exchange (BEX) on 26 November 2003.
BEX's main role as a secondary market for bonds is to:
- Support the development of Thailand's secondary bond market;
- Expand bond activities to smaller investors;
- Properly educate non-institutional investors about an additional investment instrument and the benefits of diversification.
The TSD is a subsidiary of the SET and was established on 16 November 1994. Operations started on 1 January 1995. The main function is to develop and promote back-office systems for the after-trade services.
The TSD acts as the central securities depository and acted as the only clearing house and securities depository centre in Thailand until 15 February 2010, when the central counterparty role migration to Thailand Clearing House Co Ltd (TCH) was announced.
The post-trade service provided by the TSD is divided into two main areas:
- Securities Depository;
- Securities Registration.
Thailand Clearing House (TCH)
TCH is a subsidiary of the SET and was established on 9 August 2004 and acted as a clearing house for derivatives traded on the Thailand Futures Exchange (TFEX). Since 2010, the clearing and settlement functions for equities and bonds have been transferred to TCH from TSD. TCH is currently the integrated clearing house for all financial products and acts as the central counterparty to guarantee the performance of payment and securities delivery of any trading transaction on the SET, Market for Alternative Investment, Bond Electronic Exchange and the TFEX, with the exception of gross settlement transactions.
Thai Bond Market Association (ThaiBMA)
ThaiBMA is a self-regulatory organisation with the purpose of maintaining a fair and efficient operation of the bond market and to be an information centre for the Thai bond market. Its membership includes commercial banks and securities companies.
There are four main areas where the ThaiBMA plays key functional roles in:
- Self-Regulatory Organisation (SRO): Oversee and monitor the conduct of its members to ensure fairness and efficiency in debt securities trading;
- Bond information centre and pricing agency: Be the sole information centre and pricing agency for the bond market;
- Market convention and standards: Set and enhance market convention and standards;
- Market development and education: Enhance market development and education.
Bank of Thailand (BOT)
Bank of Thailand was founded as the Thai National Banking Bureau in 1939 with the status of a department attached to the Ministry of Finance.
In 1942, the Bank of Thailand Act was published, decreeing the Bank of Thailand a “juristic person” responsible for all central banking activities.
Responsibilities of the Bank of Thailand are to:
- Formulate monetary policy to maintain monetary stability;
- Supervise financial institutions;
- Act as banker to the government and recommend economic policy to the government;
- Act as banker to financial institutions;
- Manage the international reserves;
- Print and issue bank notes.
Ministry of Finance (MOF)
The MOF regulates every aspect of the Thai banking and financial services industry. Routine supervision and administration of the securities market is delegated to the SEC. Supervision of the banking sector is delegated to the Bank of Thailand.
Bank of Thailand
BOT supervises the banks and finance companies under the Banking Act of 1962 and the Act on the Undertaking of Finance, Securities and Credit Business of 1979.
It has the role of formulating monetary policy to maintain monetary stability and regulates the Foreign Exchange (FX) and money markets.
Securities and Exchange Commission (SEC)
The SEC regulates the equities and bonds markets. Regulation and supervision are done under the Securities Exchange Act (SEA) of 1992. Under the SEA, the SEC is also responsible for regulation of the primary market.
Stock Exchange of Thailand (SET)
Market surveillance of the securities market is conducted by the SET.