Liberalization on Cross Border Access: Thai SECs Policy Response

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Liberalization on Cross Border AccessThai
SECs Policy Response
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I. Thai Securities Industry in Brief

• There are 39 securities firms

• 17 foreign subsidiaries
• 13 bank/finance subsidiaries
• 9 stand alone

• Almost all securities firms concentrate on
  broking business 70-80 of total revenue

• Relatively small size firms with total assets
  (per firm) less than USD 300 mil.

• Customer base is dominated by retail investors
  70-80 of equity trading volume

• Foreign investor group contributes to about
  20-25 of equity trading volume and about
  30 of holding

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II. Challenges for Changes
Globalization, Liberalization, and Consolidation
are Common Trends of Developments in East Asian
Region

• Globalization

• Linkage between exchanges

• SGX and ASX launched co-trading link in 2001
• SGX traded AMEX-listed ETF in 2001

• Liberalization

• Commission rate

• SG in 2000
• HK in 2003

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II. Challenges for Changes

• Foreign ownership

• stock brokerage MY in 2004

• Financial services

• adopt a single license regime SG in 2002
  
  HK in 2003
• allow financial institutions to do agency
  services JP in 2004

• Consolidation

• Merger

• consolidate stock brokerage MY started in 2000
• merging exchanges SG, MY, etc.

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III. Measures Taken to Accommodate Regional
Developments (By Thai Authorities)

• Toward liberalization

• liberalize MF license in 2002
• liberalize foreign ownership in securities
  firms 100 foreign ownership is allowed

• Toward globalization

• launch various schemes to facilitate cross
  border investments

• Foreign Investment Funds (FIF) scheme in 2002

• asset management companies are allowed to invest
  abroad with initial aggregate ceiling of
  USD 200 mil.
• additional aggregate amount of USD 500 mil. was
  granted in 2004

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III. Measures Taken to Accommodate Regional
Developments

• Scheme for qualified domestic institutional
  investors in 2003

• institutional investors are allowed to invest in
  sovereign bonds issued abroad

• Baht bond scheme in 2004

• allow international financial institutions to
  issue baht bond

• ADB issue ? 4,000 mil. baht bond in May 2005

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IV. Policy toward Further Changes in
Liberalization

• Strengthen securities industry

• Widen business activities encourage
  diversification of revenue sources SBL,
  Repo, derivatives, etc
• Reconsider to liberalize brokerage commission
• Consider to allow foreign securities offerings
  in domestic market via local brokers
• allow cross border services to institutional
  investors for OTC derivatives dealing

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IV. Policy toward Further Changes in
Liberalization

• Co-operate in Regional Integration Activities/
  Projects

• Harmonize and mutual recognize regulations under
  Asian Forum, such as Asian Capital Market
  Forum (ACMF)

• disclosure requirements
• accounting and auditing standards
• distribution rules
• cross-recognition of qualification of market
  professionals

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IV. Policy toward Further Changes in
Liberalization

• Actively participate in the project of Asia Bond
  Mutual Funds working on the issues of

• mechanism of issuing, selling, managing the
  funds
• relaxation of regulations on tax and capital
  control

• Paving the way for cross-border trading of
  mutually acceptable investment funds, such
  as Letter of Intent on mutual recognition
  between TH SEC and HK SFC