Trading via basket orders will enable brokers to order in batches of individual securities instead of making individual orders one at a time. The brokers will be able to manage customer orders more efficiently, especially when they deal with derivative orders.
By facilitating derivatives investing and index arbitrage activities, basket trading will make portfolio management more efficient, especially for investment management firms with index-linked funds under management. Allowing basket orders will thus be beneficial to investors and will enable the Thai market to become more in line with other international exchanges.
Presently, basket orders are being used in several of the world’s larger bourses, e.g., in Hong Kong, New York and Singapore.
Securities to be traded in basket orders must be on the SET50 list. Their buy/sell prices stated in the orders must not exceed required price intervals. Basket orders can be sent during normal trading hours, and each basket must only be made up of either buy or sell orders. Each order included in a certain basket will be queued and matched in the SET’s trading system by time and price priority, similar to the trading process for normal orders.
To safeguard the system and the market, if necessary or to prevent damage to the market, the SET may temporarily prohibit trading via basket orders.
The SET has already discussed such orders with the working committee assigned to this matter, comprised of representatives from the Association of Securities Companies, which held a hearing for SET member companies on December 22, 2005. Further steps will be undertaken to educate investors and other relevant parties.
