The BEX is currently operating in line with the Bond Market Development Plan Phase II by focusing on making the bond market, in addition to financial institution system and the stock market, one of the three principal pillars of the Thai financial system. The BEX will promote more systematic issuance of the public sector’s bonds, more participation by retail investors in the bond market, and encourage the private sector to issue more bonds as their fundraising choice. Presently only 68 out of the total 470 listed companies on the SET and mai (Market for Alternative Investment) have issued bonds.
Mr. Santi said, “We expect that, by 2006, the BEX will be able to extend our services to retail and institutional investors, as well as the bond traders. We currently have the capacity to serve only the SET’s member companies.
”In promoting the issuance of bonds, the BEX will encourage the private sector to improve their corporate ratings so as to prepare for their bond issuance. We will cooperate with financial advisors in helping clients utilize bonds as a fundraising alternative. Furthermore, we’ll encourage more bond analysis. For 2005, we target that the total bond market size will reach THB2.5 trillion (approx. USD62.5 bln.),” he continued.
In addition to the above plans, the BEX will promote more transparent and adequate disclosure of bond information, based on fairness for all parties. Derivatives on bonds will also be encouraged. The BEX will also encourage the elimination of unfair tax treatment on bond transactions on the one hand, and, on the other hand, encourage utilizing tax measures to increase the number of bond transactions.
Concerning its trading platform, the BEX has bought an electronic trading platform from ThaiBDC and is getting the pooled system platform ready for operation. It expects to provide its services through this electronic system from Q3/2005 onwards.
The BEX has been promoting the bond market in various ways, including fee exemption. Registration fees for bonds issued by the government or state enterprises, fees relating to bonds issued by international organizations, foreign governments and listed, as well as non-listed, companies have all been waived until December 2005.
“We have also focused on education to encourage more participation by retail investors. Our activities have included seminars, training courses, the publishing of books such as the ‘Investing in Bonds’ pocket book and the ’Bonds’ textbook, providing promotional information to newspapers, TV and radio programs, and also through www.bex.or.th,” the BEX’s CEO said.
He noted, “The BEX has been providing facilities for corporate bond trading since November 26, 2003. We started with 22 listed issues of bonds having an outstanding total value of THB152.65 bln. (approx. USD3.82 bln.). Now, as of April 18, 2005, there are 42 listed issues having an outstanding total value of THB195.73 bln (approx. USD4.89 bln.).
“Currently, bond trading among retail investors is done utilizing the Automatic Order Matching (AOM) method, while trading amongst institutional or large-scale investors uses the put-through (PT) method. Both have to be transacted through securities companies. Corporate bonds traded on the BEX using the AOM method must obtain a credit rating of no lower than the BBB grade,” Mr. Santi concluded.
Information on bond market movements can be viewed at www.bex.or.th.
