The Stock Exchange of Thailand (SET) announced its four strategies to expand business, enhance service quality and effectiveness, and increase competitiveness to be ready for a highly competitive environment after demutualization. SET will be the preferred destination for Thai listed companies to use for fundraising and to fill all investors’ needs. The strategies will help increase market capitalization by THB100 billion (approx. USD33.33 billion) from new listings. In addition, SET will launch new products to fill local and foreign investors’ needs.
“SET’s Board of Governors approved the 2011 strategies to strengthen SET’s international competitiveness. Next year is important for the SET, as it has to be prepared for a highly competitive environment after demutualization, where there will be new players in the market, including in securities trading, clearing, and depository and registration services. Therefore, SET will have to further enhance its competitiveness, expand business opportunities, and connect with foreign exchanges and investor networks,” disclosed SET President Charamporn Jotikasthira.
The four strategies are to: 1) Expand coverage, 2) Enhance value, 3) Increase efficiency, 4) Improve capability.
“SET will expand its business by increasing the number of products, broaden and deepen its investor base, and market access. In 2011, SET will launch oil futures, silver futures, transferable custody receipts, and new exchange-traded funds. Meanwhile, SET will raise its market capitalization by THB100 billion from new listings, especially in the insurance, telecommunication, automobile and auto parts, and energy and alternative energy sectors,” noted Mr. Charamporn.
SET will expand its investor base by working with commercial banks to encourage clients who now use Internet banking to go to Internet trading as well. Also, SET will expand its post-trade services by allowing current member companies to do clearing for other members, including becoming members of foreign securities depositories to support cross-border securities clearing, according to the ASEAN Linkage and dual listing plan.
“SET will enhance the value of listed and securities companies and investors, increase liquidity of existing products, and promote securities trading of three target groups, i.e., retail investors who trade via the Internet or investor contacts, foreign investors, and local institutional investors. Moreover, SET will increase the investment of Chinese and Japanese institutional investors, since the regulations in these two countries facilitate more trading. SET will also expand the trading hours of gold futures to overlap with the New York Stock Exchange’s trading hours to increase investment opportunities and reduce price fluctuation when the market closes.
To increase efficiency, SET will improve investing through non-voting depository receipts (NVDR) to enhance efficiency and answer the needs of foreign investors. SET will also enhance risk management processes in post-trading services, e.g., managing risks of the Clearing House Co., Ltd.; reorganizing the structure of the Securities Investors Protection Fund, and enhancing information distribution systems to reduce listed companies’ burdens.
“To improve capability, SET will focus on developing its IT system according to the IT Master Plan, which is important for securities trading and post-trading service infrastructure. This focus will help product launches and service enhancements to be done more quickly and increase the quality and standards of the Thai exchange to be world-class,” added Mr. Charamporn.
The Capital Market Development Fund (CMDF) will become a fund to develop the capital market after the demutualization. In 2011, the CMDF will adjust its role to be responsible for developing the whole capital market. The CMDF will work with the public sector and capital market-related associations to create a roadmap covering all capital market operations. Developing capital market professionals will be the job of the Association of Investment Management Companies and Association of Securities Companies, which will become self-regulatory organizations.
The CMDF will focus on increasing capability of personnel in securities companies and commercial banks to be able to more effectively give investment advice to clients. In the same time, CMDF will continue to enhance the ability of investors and the general public to plan for and carry out prudent investment, including increasing their financial literacy. Moreover, SET will support listed companies to implement corporate governance (CG) principles more vigorously, including promoting listed companies to fully benefit from investor relations. These measures will help firms move up from their current ratings of “good”. These steps to develop the capital market in the long term will help make Thai capital market standards be more credible and well-accepted, both domestically and internationally.
“SET is currently seeking to amend the Securities and Exchange Act as part of its preparations for demutualization. SET’s four strategies, as outlined above, will help build SET to be a domestic champion, answering all needs of investors and companies seeking to raise funds. These strategies will also help us becoming increasingly competitive in the region. Demutualization will allow SET to continue being a strong pillar driving the Thai economy, furthering Thai business competitiveness and better living standards,” concluded Mr. Charamporn.