TSD

1
TSDs SBL Service

• The 8th ACG Cross Training Seminar
• June 28, 2006
• Busaba Kongpanyakul
• Business Development Department

2
Outline

• Background of SBL in Thailand
• Roles of TSD
• Structure of TSDs SBL Service
• Service Scope
• Taxes
• Future Outlook

3
Background

• Year 1999
• TSD assumed the role of the lender of last resort
  to prevent defaults in securities trading
• Some securities companies obtained SBL license
  from SEC
• Current market situation
• Small volume of SBL transactions
• Lack of supply
• Few SBL licensees

4
Roles of TSD

• Lender of last resort
• Develop SBL Master Agreement
• Service Utility for SBL intermediaries

5
Structure of TSDs SBL Service
Principal (TSD Member)
Agent (TSD Member)
6
Service Scope Phase 1
TSDs SBL Service
7
Participation

• Qualified participants TSDs depository members
• Apply for participation in SBL and receive an
  authorization from TSD
• Comply with TSDs rules and regulations of SBL
  transactions
• Open SBL account and SBL collateral account

8
Types of TSDs SBL Transactions

• Settlement-Coverage Transactions
• To prevent any default during the clearing and
  settlement process
• Clearing House is the only borrower and acts as a
  principal
• Put Through Transactions
• TSD acts as an intermediary agent
• All trade conditions are pre-negotiated between
  the borrower and the lender

9
Eligible Securities

• Scripless form of the securities deposited at TSD
• Except
• All kinds of warrants
• Suspended stocks, posted SP
• Stocks posted C (Compliance)
• Debenture bonds
• Thai Trust Funds
• NVDR, DR

10
Eligible Collateral

• Baht-denominated cash
• Government bonds
• Listed stocks in the SET
• Letter of Guarantee

11
Collateral Management

• Daily mark to market
• Stocks Last closing price announced by the SET
• Bonds Reference price announced by Thai BMA or
  BOT
• Set haircut rates for each type of collateral
• Handle margin calls
• Eligible margin baht-denominated cash only
• Margin is kept and managed by TSD

12
Corporate Actions
It needs to be paid to the original owner in full
amount on the payment date.
Cash/Stock Dividend

1. The original owner indicates the intention to
   subscribe and pays subscription money to the
   other party at least 1 day before the deadline.
2. The other party has to subscribe and deliver the
   securities to the original owner by the listing
   date.

Rights Issue
The original owner must recall or request for
collateral substitution at least 4 days before
the record date.
Voting Rights
13
Taxes

• Exempt taxes as follows
• Tax on income from transfer of loaned and
  collateral securities
• Withholding tax on manufactured dividend/interest
  (for Thai or foreign juristic persons in Thailand)

14
Future Outlook

• SBL transactions is expected to increase due to
• Development of derivatives market
• Encouragement of regulators
• SEC decreases license fee from THB 100,000 to
  20,000 and waives annual fee
• Securities firms are allowed sell short
• SEC plans to allow mutual private funds to sell
  short

15
Thank You

• Busaba Kongpanyakul
• busaba_at_set.or.th