Thailand Securities Depository Sets Up A Clearing House For Derivatives, To Start By Next May

President of Thailand Securities Depository Co., Ltd. (TSD), Mrs. Nongram Wongwanich, reported that in its May 24, 2004 meeting, the TSD board resolved to establish a new company to do all clearing and settlement for derivatives of the Thailand Futures Exchange Pcl. (TFEX). TFEX was formed in accordance with the resolution of the board of The Stock Exchange of Thailand on March 24, 2004 to be the center of derivative trading. Having the new clearing house would, therefore, add efficiency and credibility to the clearing and settlement of securities for the derivatives, while reducing the risks faced by traders.

The TSD President said, “TSD has been assigned to handle the clearing and settlement of securities for derivatives. The risk management system and the clearing infrastructure will be set up in June 2004 and will be ready to provide service for derivatives by May 2005.

This new clearing house will make TSD the center for settlement of derivatives. Thus, TSD will be able to see the overall picture of risks carried by its members, while helping to develop tools for complete risk management and protection against future risks. This will effectively administer risks involving the clearing and settlement of derivatives, while helping cut operating costs of members,” she concluded.

The responsibilities of the new clearing house include ensuring that traders abide by their agreements, supervising the clearing and settlement for futures contract values, and taking care of deposits. Thus, the new clearing house will act on behalf of traders, and will benefit investors.