Major players in the Thai capital industry aim to move towards being an integrated high-profile regional market in three years. This vision is underpinned by a number of strategic initiatives to be undertaken by The Stock Exchange of Thailand (SET), Market for Alternative Investment (mai), Bond Electronic Exchange (BEX), and Thailand Futures Exchange PCL (TFEX).
Each of these exchanges, operating under the SET group’s umbrella and representing the nation’s equity, bond, and financial derivatives markets, have committed themselves to specific strategies over the next three years.
“Our goals - lifting the Thai capital industry’s regional profile, market integration, expanding product variety, networking and the development of strategic partnerships - are contained within the recently-formulated eight strategic agendas and 11 action plans,” SET President Ms. Patareeya Benjapolchai declared.
1st strategic agenda: Increasing market integration, through three strategic actions:- Introducing new products, such as exchange-traded funds (ETFs) by Q2/2007. The fund has been approved by the SET Board, with an initial public offering (IPO) of THB 300 million. The Exchange has allocated THB 100 million towards its establishment. TFEX will launch SET50 Index Options by Q3/2007. BEX will strive for more securitization. It is expected that securitized papers will be available by 2008.
- Increasing the number of listed firms by targeting 64 potential companies. Forty are expected to list on SET next year, with another 24 listing on mai. Potential listings include large private firms, state enterprises and their sister companies, companies in the service industry, and Thai firms with investments overseas.
“mai will lift its profile and use its ‘Matching Fund’, a venture capital (VC) fund being established this year, to support and develop new businesses listed on the market”, mai Advisory Committee Chairman Mr. Vichate Tantiwanich added - Boosting liquidity by raising the average free-float of qualified companies (those exceeding 15% free-float) from 45% to 50%, and ensuring at least an additional three market-makers in 2007. Concerning the bond market, the private repo service will be finalized next year.
2nd strategic agenda: Integrating the fundamental structure and all information technology systems prior to connecting all trading systems, as well as regulation amendments to enable investors to hold a Single Account. SET will also formulate the 4th action plan, open the investment knowledge center, and open the “Integrated Information Portal”, which offers trade data from all markets on the SET website, within 2007. There will be more studies and system development to accommodate the interconnection of trading, back office and all related systems needed to introduce integrated investor accounts. In addition, integrated trading screens and inter-market surveillance at the BEX and TFEX will be ready in 2009.
3rd strategic agenda: Managing more convenient trade channels for all types of instruments. From 2007 onwards, implementing the 5th action plan, particularly in Direct Market Access (DMA), will enable institutional investors to more efficiently direct their trade orders to the SET and TFEX. SET will follow the 6th action plan, which aims for investor base expansion via the Internet, using a web-based program that effectively responds to varied investor demands. More marketing activities and campaigns will be organized to vastly promote investment via the Internet, with Money Channel as the major information dissemination channel.
SET expects to see the growth of the investor numbers in every market -- both those who invest directly and through all types of funds, e.g., mutual, provident and government pension funds, to as many as 5 million persons by 2007. It plans to further promote “Ownership Investment” and forecasts to see 200,000 active accounts in 2007, while systematically increasing the number of institutional investors to 20% of total trade in 2009. It also plans to double SET’s turnover ratio and sees the turnover ratio at mai rise by 1.5 times to heighten liquidity in both markets.
Ms. Kesara Manchusree, TFEX Managing Director, said that after introducing SET50 Index Options, the DMA and the market maker for new products in 2007, she expects to see TFEX’s total trade rise to 5,500 – 6,000 contracts each day.
4th strategic agenda: revamp regulations and standards to match those in regional markets, by reducing time and procedures for stock listing to not longer than 60 days by 2009. This will be achieved through close collaboration with financial advisors and related agencies. Accounting standards will also be upgraded in accordance with the International Financial Reporting Standard (IFRS), as suggested in the 7th -9th action plans.
“At the same time, we will pursue good governance, emphasize stockholders’ rights and accountability of the Board of Directors, and follow-up on implementation and development of investor relations for all listed companies through educating their personnel. SET will follow the 5th strategic agenda, working with commercial banks and securities companies to encourage investors to perform securities-related transactions using the Internet service of all commercial bank branches nationwide. This will give investors more options in executing trade orders more conveniently, and is a part of the 6th action plan,” said Ms. Patareeya.
Meanwhile, according to the 6th strategic agenda, there will be more interconnection between Thai exchanges and foreign markets, as mai, BEX and TFEX’s roles expand. There will be more bi-lateral and/or multi-level interconnection among stock exchanges in Asean and more bi-lateral cooperation, just like mai’s collaboration with Korea’s KOSDAQ (in the 10th action plan).
Dr. Santi Kiranand, CEO of BEX, said that in order to proceed with all these strategies, BEX will collaborate with SET in connecting all trade systems with foreign markets, while promoting more exchanges of information among bond markets within Asean. BEX will also encourage more linkages between trading systems of local and foreign bond markets. Furthermore, BEX will play an active role in supporting regulations on cross-listing and cross-trading, which will make it more attractive for investors to enter both SET and BEX.
SET will collaborate with state and private agencies to further strengthen its network of cooperation to implement major policies in benefiting the Thai capital market according to the 7th and the 8th strategic agendas, through support from the government in terms of tax privileges for listed companies, promotion of mandatory savings, and tax exemptions for profits on bond trading. Meanwhile, mai will work with concerned agencies to amend necessary regulations related to venture capital (as stated in the 11th action plan).
In addition to all the above strategic agendas, SET will also launch more market promotion and educational campaigns to continuingly expand the investor base. As part of these plans, SET will help educate youths and new investors on personal savings and investment, e.g., from Grade-1 to Grade-12 students, vocational-school students, and those from universities. SET will use academic campaigns, curriculum and e-learning at more than 10,000 schools nationwide. Teachers will be trained nationwide in a special training program. After having completed this mission, SET expects that more than 20,000 youths will get to know and understand more about personal finance and investment, especially with Money Channel acting as a major information dissemination channel for this.
“The SET is confident that these strategic agenda, with the cooperation of mai, BEX, TFEX, Thailand Securities Depository Co., Ltd (TSD), Settrade.Com and all subsidiary units will be an important step for SET to achieve its three-year strategic plan and become the region’s integrated and interesting secondary market as well as a major force in the country’s capital market to drive the Thai economy forward in a long term”, said Ms. Patareeya.
