The Securities and Exchange Commission (SEC) will work with the Finance Ministry to review its controversial proposal that the Stock Exchange of Thailand (SET) contribute 90% of its annual net profit to the imminent Capital Market Development Fund (CMDF).
The retreat follows a strong outcry against the requirement.
Moreover, the CMDF will focus on capital market development while the SET will have the right to pick the fund's directors.
The fund's objectives will be discussed later by the SET, SEC and the Finance Ministry, said SEC secretary-general Rapee Sucharitakul at a press briefing yesterday.
"The initial fund of 8 billion baht, plus a portion of the SET's net profit that will contribute to it, will be considered again. But we cannot say right now what the exact amount will be," he said.
"The SET can also reclaim the money it gives to the fund in the event of an emergency, or if it is required for infrastructure investment," he added.
The proposed seed capital from the SET, as well as its annual contribution, was met with strong criticism from the SET and brokers.
They argued the stock exchange would not be able to develop or afford to maintain its trading system under such financially cumbersome conditions, and that the objectives of the CMDF's capital usage were unclear.
Finance Minister Apisak Tantivorawong eventually summoned the heads of both the SET and the SEC to settle the row.
According to the results of that meeting, all three bodies agreed to separate the capital development function from the bourse operator. The CMDF, which will take over the capital development role, will not be a state agency to give the fund greater flexibility.
Moreover, the SET's chairman will serve in the same role at the CMDF.
Mr Rapee said the SEC and SET will jointly amend the law after a recently ended public hearing on the matter. He expected it would take a month to send a proposal to the Finance Ministry and then forward it to the cabinet for approval.
After that, the amended law would be vetted by the Council of State, which is expected to take another three or four months. It would then be sent back to the cabinet and relayed to the National Legislative Assembly (NLA) for deliberation.
Meanwhile, SET president Kesara Manchusree said the CMDF will be run separately from the SET in most areas but that SET employees will be responsible for administration, fund management, and investment.
Capital market stakeholders have complained that such a hefty contribution would weaken the SET financially. They said its ability to make investments and run operations should be taken into account when assessing future contributions.
Others suggested the CMDF's board should comprise representatives not just from state agencies but also the capital market given their level of market insight and ability to push the fund to achieve its objectives.
The SET has 25 billion baht in capital reserves and 39 billion baht in total assets. These include office buildings, a reserve fund for clearing and settlement of 7 billion to 8 billion baht, and that amount again in cash flow. It posted a profit of 1.2 billion baht last year.