The Managing Director of TFEX, Mrs. Kesara Manchusree, announced that today (March 22, 2005) TFEX and TCH had invited all securities companies interested in being futures brokers to attend a meeting to gain more details on membership requirements for both TFEX and TCH. Also detailed at the meeting was information on system preparation and on TFEX’ first product—the SET50 Index Futures.
“After hearing the views from meeting attendants, we found that they basically agreed with what we presented concerning membership requirements and supervision. We will begin accepting the first 15 members (brokers) in May this year. Securities companies wishing to apply for TFEX membership can do so in tandem with their applications for TCH membership and for their brokerage licenses from the Securities and Exchange Commission.
“Regarding the clearing and settlement of derivatives instruments, the SET will provide full support, both financially and operationally, and will provide back office services for derivatives as well. TFEX will test all systems to ensure that they are ready for trading of the SET50 Index Futures in November,” Mrs. Kesara said.
Mrs. Udomwara Dechsongjarus, President of TCH, the clearinghouse for derivatives transactions, talked about risk management in derivatives trading. “The TCH will be the guarantor of every transaction by acting as the TCH members’ contract counter-party. This is why the TCH has to consider its membership carefully as well as provide systems to assure all relevant parties about the clearing and settlement process in Thailand’s derivatives market. The process includes the calculation and collection of upfront collateral from members, and the operating of effective risk management systems”.
The TCH has also established a “Clearing Fund” to reduce the effects of any risks that may materialize during the clearing and settlement process. This clearing fund has been separated from that of the SET fund, as derivative instruments have a different nature to them from that of the stocks.
The clearing fund will be established and maintained by the Thailand Securities Depository Co., Ltd. (TSD), which will allocate THB100 mln. for the fund. TCH members will also contribute to it. Furthermore, the SET has reserved an additional THB300 mln. for emergency cases.
