As part of its policy of introducing new products to the market, Thailand Futures Exchange PCL (TFEX) will launch gold and stock futures by Q4/2008 in response to investor demand and the rising price of gold.
TFEX’s board of directors has taken this initiative to supply more investment alternatives and risk management products, TFEX Managing Director Kesara Manchusree said.
“Gold futures will be attractive as there is a broad familiarity with the underlying asset and, as an alternative to equities, it increases portfolio diversification. Gold’s recent price rise, returns, volatility and liquidity appeal to investors,” Ms. Kesara added.
Thai people like to buy gold as an accumulated asset and are familiar with daily trades, as evidenced by about 6,000 gold shops in Bangkok and the provinces. Furthermore, demand for the metal in electronics and accessories is rising.
TFEX will also launch stock futures by Q4/2008. Like gold futures, stock is a suitable underlying product as people are familiar with it and brokers are ready to use what they have learned from SET50 Index Futures to educate the market.
“Before introducing gold futures, some regulatory change is required. The exchange will ask the Ministry of Finance to amend those currency exchange controls, relating to trading gold futures contracts, which predate the establishment of TFEX. This process may take at least six months. In regard to stock options, TFEX is postponing the product launch to 2009 in order to provide investors and industry practitioners more time to prepare for this instrument,” Ms. Kesara concluded.
