The Stock Exchange Of Thailand Board Approves Establishing Investor Protection Fund And Supports The New “Federation Of Capital Market Associations”

Executive Vice President of The Stock Exchange of Thailand (SET) Mrs. Patareeya Benjapolchai announced that the SET Board of Governors has approved, in principle, to set up an Investor Protection Fund (IPF) to secure investors’ assets deposited at securities firms. The SET will provide the IPF’s initial start-up funds of THB 300 million. Securities firms that are SET members will then each be requested to pay an additional amount on a monthly basis in proportion to their trading value. This move is aimed at building confidence amongst investors as well as further developing the infrastructure for the Thai capital market over the long-run.

“The SET will ask for all SET members’ participation in the IPF since the aim of the IPF is to protect their investors. The Fund will provide compensation to investors who fail to get the assets they deserve from securities companies after an arbitrator has made a final judgment in a commercial case but the securities company involved hinders the resolution process. This failure to receive deserved assets could also be due to a firm’s bankruptcy.

The securities companies participating as members of the IPF will gain the goodwill of their investors as they will be entitled to have a marketing mark indicating their IPF membership. This should enhance the trust their customers have for them,” Mrs. Patareeya said.

On the establishment of the IPF, the SET is currently considering which model the fund should be based on. The two models being considered are 1) A fund established as a part of the SET’s juristic entity, or 2) A fund established as a limited company with its initial capital input of THB 300 million.

Securities firms that become IPF members before the end of 2004 will be exempted from an entry fee. If they become members after 2004, they will be required to pay an entry fee, which will be revised upwards every six months.

In addition to establishing the IPF, the SET Board also acknowledged the setting up of the “Federation of Capital Market Associations” by five associations. These associations are the Association of Securities Companies (ASCO), the Association of Investment Management Companies (AIMC), the Listed Companies Association, the Securities Analysts Association (SAA), and the Thai Investors’ Association (TIA). The group will work together to hold activities to promote investment from both domestic and overseas markets. The Federation will also offer suggestions to other related associations on how to develop capital market businesses. The Board also acknowledged that Mr. Suthep Peetakanont, Chairman of the ASCO, had been elected as the Federation’s first chairman.

Mrs. Patareeya went on to say that: “The SET Board also resolved that the SET will participate in the Federation by supporting activities and other functions, organizing meetings, and coordinating with related parties, as well as working on other assignments as designated by the Federation’s committee.”