Thailand Securities Depository Company (TSD), a subsidiary of the Stock Exchange of Thailand (SET), will join the fixed-income registration business to support securities companies competing with foreign brokers in Asean.
Currently, TSD has three main businesses including settlement and clearing services, a depository, and registration for equity and derivatives. In the fourth quarter, the company entered the fixed-income market by offering a scripless depository service for government saving bonds worth a total of 80 billion baht.
"The entry into the fixed-income market will aid our brokers' ability to compete within the Asean Economic Community, and we are also using the SET's existing infrastructure more efficiently," said Chanisa Chutipat, the SET's senior vice-president and head of Market Operation Division.
At the end of 2012, the total market size of short-and long-term bonds (or fixed income) issued by both government and corporate bodies was around 8.5 trillion baht, up 20% from 7.2 trillion baht in the same period of 2011.
Niwat Kanjanaphoomin, president of the Thai Bond Market Association (TBMA), said this year's bond market is expected to issue at least an additional 800 billion baht, or 10%, as state enterprises and the government plan to issue bonds to finance mega-projects.
Mrs Chanisa said the revenue from the fixed-income market is initially relatively low as the service fee is quite small, but it has potential to grow in the future. This business model also prepares TSD to be able to compete in the borderless market regardless of whether the organisation is demutualised or not.
TSD contributes 30-40% of the SET's consolidated revenue. In 2011, the company reported total revenue of 1.147 billion baht, or 35.39% of the SET group revenue, excluding revenue from investment. Settlement and clearing generated 339 million baht, revenue from depository was 137 million baht and registration revenue was 671 million baht.