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The current SET rule stipulates that member companies require at least 10% front-end collateral of their customers’ approved credit line. However, the rule has been relaxed so that members may set a ‘flexible line’ (an approved amount an investor can buy shares with less than a 10% front-end collateral) for their clients, however, this must not be more than THB1,000,000. The present rule has been effective since July 1, 2004, and will end in December 2004.
Mrs. Patareeya noted that: “Currently nearly 50% of all accounts are trading at less than THB500,000. This new ‘flexible line’ will enable members to allow their clients who are purchasing no more than THB500,000 worth of stocks to do so without a full 10% front-end collateral. Therefore, it will enable retail and new investors to participate in the market more conveniently. However, member companies may consider the extent of their ‘flexible line’ to their clients at their own discretion.”
“The adjustment of the ‘flexible line’ has been made to manage the risks of member companies and create stability in the trading system. It will also promote and encourage more participation of retail investors in the market. The SET will propose this rule for SEC approval,” Mrs. Patareeya noted.
Mrs. Patareeya added that the SET Board of Governors also resolved to extend the waiver of fees on debenture trading, which normally costs 0.005% of trading turnover of the member companies. Moreover, the THB20,000 fixed monthly fee that the Back-office Service Bureau normally charges member companies that trade debentures will also be waived. Privileges on these two types of fees will be extended for another one year, through December 2005. This is aimed at reducing the obstacles found during trading by member companies whilst reducing the costs incurred by investors investing in the bond market.
Additionally the SET Board has approved the gross settlement as well as the net settlement of debentures to both be valid so as to provide more alternatives in their clearing and settlement.
Under the gross settlement basis, either the put-through transactions (the transactions made directly between the buyer’s broker and seller’s broker, then entering the trade into the system of the Bond Electronic Exchange, or BEX), or transactions worth more than THB10 mln. or 10,000 units can now be cleared and settled within 2 days, in accordance with the gross settlement procedure for government bonds currently used by the Bank of Thailand.
As Mrs. Patareeya added, “Presently the BEX has been waiving the filing, admission and annual fees for debenture listing through December 2005. The Board thus viewed the additional fee waivers on debenture trading and the monthly reduction in expenses to the brokers as positively affecting the development of the bond market. It will promote a more efficient market and encourage more trade transactions as well.”
