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Thailand Futures Exchanges PCL (TFEX) declared that derivatives trading accounts grew to 4,375 smashing the first year target of 3,000. The exchange achieved a daily turnover of 1,204 contracts or THB 593 million (approx. USD 16.47 million). Other initiatives announced included plans to launch SET50 Index Options in Q3/2007 and the TFEX simulation game.
In 2006, SET50 Index Futures trading volume was 198,737 contracts or THB 97,899 million. The daily average volume and the number of trading accounts opened exceeded target by 20% and 46%, respectively. The investor composition was 53% retail, local institutions 28%, and foreign investors 19%. By December 28, 2006, SET50 Index Futures had attracted 7,416 contracts.
“The derivatives market has been drawing more and mostly experienced investors. From its opening on April 28, 2006, trading turnover doubled every month, exceeding 1,000 contracts a day by August. The record volume was set on December 19, at 8,504 contracts worth THB 3,954 million, when the capital reserve policy took effect. The same day saw demand for position adjustment, as futures prices became volatile and many investors sought to switch from contracts maturing in December 2006 to those due in March 2007,” TFEX Managing Director Ms. Kesara Manchusree said.
Currently there are 23 TFEX members, with five accounting for 52% of total trade. These are KGI Securities (Thailand), Bualuang Securities, Trinity Polaris Futures, Kim Eng Securities (Thailand) and Credit Suisse Securities (Thailand), with 16.5%, 9.7%, 9.2%, 8.8%, and 8.3% of market share respectively. KGI Securities (Thailand) and Phatra Securities currently act as market makers, and TFEX is accepting additional market makers until end - January 2007.
“It was the cooperation from everybody - including supervisory agencies, member firms, units of The Stock Exchange of Thailand (SET) and TFEX, and investors - that produced such a successful year. The staff have also performed well with both normal developments and unexpected changes,” Ms. Kesara added.
TFEX dealt with some unique events in 2006. On September 20, 2006, it was closed following the coup d’état. On December 19, after the Bank of Thailand’s foreign investment regulation announcement, the exchange enacted its circuit breaker system and halted trading in the morning session, as did SET. At that time, futures prices slumped, with SET50 Index Futures maturing in December plummeting 10% in the morning and 20% in the afternoon.
Looking to the future, TFEX will continue to expand its facilities and services. Currently trading can be done through either marketing representatives or online and, in 2007, TFEX plans to introduce direct market access (DMA) enabling investors to be directly connected to the system. To bolster competitiveness, member firms’ commissions are fully negotiable. Futures market education programs and simulations will continue, emphasizing e-learning and participatory competitions.
The launch of SET50 Index Options in Q3/2007 will provide a wider range of risk management and flexible investment. TFEX will soon initiate educational programs on this product for investors, brokers and others in the market.
