Thailand

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Liberalization on Cross Border Access:

Thai SEC’s Policy Response

Thailand

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I. Thai Securities Industry in Brief

There are 39 securities firms:

Relatively small size firms with total assets (per firm) less than USD 300 mil.

Almost all securities firms concentrate on broking business: 70-80% of total revenue

Customer base is dominated by retail investors: 70-80% of equity trading volume

17 foreign subsidiaries

13 bank/finance subsidiaries

9 stand alone

Foreign investor group contributes to about 20-25% of equity trading volume and about 30% of holding

Thailand

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Liberalization

Globalization

II. Challenges for Changes:

Globalization, Liberalization, and Consolidation are Common Trends of Developments in East

Asian Region

Linkage between exchanges:

SGX and ASX launched co-trading link in 2001

SGX traded AMEX-listed ETF in 2001

Commission rate:

SG in 2000

HK in 2003

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II. Challenges for Changes:

Merger:

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

Foreign ownership:

consolidate stock brokerage: MY started in 2000

merging exchanges : SG, MY, etc.

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III. Measures Taken to Accommodate Regional Developments (By Thai Authorities)

liberalize MF license in 2002

liberalize foreign ownership in securities firms; 100% foreign ownership is allowed

Toward liberalization:

Foreign Investment Funds (FIF) scheme in 2002

Toward globalization:

launch various schemes to facilitate cross border investments

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

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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

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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

Thailand

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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

Thailand

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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