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Liberalization on Cross Border Access: Thai SEC’s Policy Response

Liberalization on Cross Border Access: Thai SEC’s Policy Response. I. Thai Securities Industry in Brief. There are 39 securities firms:. 17 foreign subsidiaries 13 bank/finance subsidiaries 9 stand alone.

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Liberalization on Cross Border Access: Thai SEC’s Policy Response

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  1. Liberalization on Cross Border Access:Thai SEC’s Policy Response

  2. I. Thai Securities Industry in Brief • There are 39 securities firms: • 17 foreign subsidiaries • 13 bank/finance subsidiaries • 9 stand alone • Almost all securities firms concentrate on broking business: 70-80% of total revenue • Relatively small size firms with total assets (per firm) less than USD 300 mil. • Customer base is dominated by retail investors: 70-80% of equity trading volume • Foreign investor group contributes to about 20-25% of equity trading volume and about 30% of holding

  3. II. Challenges for Changes: Globalization, Liberalization, and Consolidation are Common Trends of Developments in East Asian Region • Globalization • Linkage between exchanges: • SGX and ASX launched co-trading link in 2001 • SGX traded AMEX-listed ETF in 2001 • Liberalization • Commission rate: • SG in 2000 • HK in 2003

  4. II. Challenges for Changes: • Foreign ownership: • stock brokerage: MY in 2004 • Financial services: • adopt a single license regime: SG in 2002 HK in 2003 • allow financial institutions to do agency services: JP in 2004 • Consolidation • Merger: • consolidate stock brokerage: MY started in 2000 • merging exchanges : SG, MY, etc.

  5. III. Measures Taken to Accommodate Regional Developments (By Thai Authorities) • Toward liberalization: • liberalize MF license in 2002 • liberalize foreign ownership in securities firms; 100% foreign ownership is allowed • Toward globalization: • launch various schemes to facilitate cross border investments • Foreign Investment Funds (FIF) scheme in 2002 • asset management companies are allowed to invest abroad with initial aggregate ceiling of USD 200 mil. • additional aggregate amount of USD 500 mil. was granted in 2004

  6. III. Measures Taken to Accommodate Regional Developments • Scheme for qualified domestic institutional investors in 2003 • institutional investors are allowed to invest in sovereign bonds issued abroad • Baht bond scheme in 2004 • allow international financial institutions to issue baht bond • ADB issue ฿ 4,000 mil. baht bond in May 2005

  7. IV. Policy toward Further Changes in Liberalization • Strengthen securities industry • Widen business activities; encourage diversification of revenue sources: SBL, Repo, derivatives, etc • Reconsider to liberalize brokerage commission • Consider to allow foreign securities offerings in domestic market via local brokers • allow cross border services to institutional investors for OTC derivatives dealing

  8. IV. Policy toward Further Changes in Liberalization • Co-operate in Regional Integration Activities/ Projects • Harmonize and mutual recognize regulations under Asian Forum, such as Asian Capital Market Forum (ACMF) • disclosure requirements • accounting and auditing standards • distribution rules • cross-recognition of qualification of market professionals

  9. IV. Policy toward Further Changes in Liberalization • Actively participate in the project of Asia Bond Mutual Funds; working on the issues of • mechanism of issuing, selling, managing the funds • relaxation of regulations on tax and capital control • Paving the way for cross-border trading of mutually acceptable investment funds, such as Letter of Intent on mutual recognition between TH SEC and HK SFC

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