.jpg)
To ease cost calculation, Thailand Securities Depository (TSD)’s Board of Directors has resolved to adjust the repurchase (repo) fee from the current progressive rates to a flat rate of 0.015% per annum. To encourage use of the service, the board announced that TSD members that have applied for and used the service by the end of this year will receive a 25% discount. Both initiatives will increase the liquidity underlying repo transactions by the private sector, following the Bank of Thailand (BOT)’s planned closure of its repo market at the end of this year.
Under the new arrangement, the fee will be calculated daily from the total worth of bids and offers. Previously, members were charged fees monthly, at a minimum of THB 1,000 per month, TSD Chief Executive Officer Ms. Sopawadee Lertmanaschai said.
“To encourage use of the service, TSD members that have applied for and used the service by the end of this year will receive a 25% discount for six months,” she said.
In addition, TSD can now accommodate the management of single-party repo contracts. This will further increase liquidity in the service, which acts as a liquidity management mechanism for financial institutions and the private sector, and is a popular portfolio management tool for foreign institutional investors.
The depository introduced its repo service support system on May 15, 2006 to facilitate private sector transactions, following BOT’s intended withdrawal from the area by Q4/2007. The Bank’s repo market recorded a total daily worth of THB 110 billion from the beginning of this year. TSD expects to gain a 25% market share in 2008.
Currently, the depository has 11 members registered for the repo service, including Asia Plus Securities PCL, Bangkok First Investment and Trust PCL, Bankthai PCL, Finansa Capital Co. Ltd., Finansa Securities Co. Ltd., KGI Securities (Thailand) Co., Ltd., Kiatnakin Bank PCL, Kim Eng Securities (Thailand) PCL, Krung Thai Bank PCL, SME Bank of Thailand and Thanachart Securities PCL.
