SET has eye on global stage with new tie-up

SET has eye on global stage with new tie-up

Thai-German bourses in collaboration

The Thai stock market has set an ambitious goal to make a presence on the global bourse stage in line with the rising trend of rapid flow of asset allocations, says the Stock Exchange of Thailand president Charamporn Jotikasatira.

From left, Charamporn Jotikasthira, SET president, Sathit Limpongpan, SET chairman, and Andreas Preuss, deputy CEO of Deutsche Boerse AG, celebrate securities ties between Thailand and Germany.

As part of the aim, the SET recently made a collaboration with the German Deutsche Börse AG and Germany’s futures exchange Eurex, in a move that would allow Thai equity products such as market index and exchange traded fund (ETF) to trade on the European bourse.

A memorandum of understanding (MoU) was signed recently between the SET and and the German Börse AG to facilitate the development of securities and derivatives markets between the two partners.

“In the future, we hope to see some orders from Germany, which will allow local investors to trade some products at night via Deutsche Borse or Eurex,” said Kesara Manchusree, chief marketing officer and president of Thailand Futures Exchange (TFEX).

“The partnership will increase the trade volume. For example, once the South Korean bourse allowed its option to be traded in the night time at Eurex in the past three years, its [trade] volume has been increasing tremendously,” said Mrs Kesara.

Mr Charamporn said that Thailand has a chance to achieve the mission as the global trend is focused on asset allocations, which are flowing rapidly across the world.

In future, investors will not invest only in the local bourse as he noted that an increasing demand for foreign investment funds confirms the trend and demand of investors to diversify risk beyond local boundaries.

At the beginning, most of investors who invested in South Korean’s option product in Eurex were Korean but currently around 50% of investors are non-Korean. The trading volume of night session has also rose to around 10% of total volume.

“However, the increasing volume will be only indirect benefit, our major purpose is to expand visibility of Thai market and our products,” said Mrs Kesara.

Mr Charamporn said under the MoU, the two partners will work closely in term of transaction flow, clearing and settlement similar to the collaboration it has had with the Asean Link.

Mr Charamporn said transaction through Asean Link remains small currently as most of transactions are heading to the main markets such as those in Europe, the US and Japan.

“That’s the reason why we seek cooperation with Germany’s bourse,” said Mr Charamporn.

He added that the move will help to improve the efficiency and support securities of the SET. Local brokers especially will learn to adjust to cope with the tougher competition across the globe.

“The connectivity among two bourses will help local brokers, especially those who have no regional or global partners as a network as they should have worked on resources and researches for their customers also,” said Mr Charamporn.

He said Deutsche Borse has a policy to cooperate with global markets. The German window may link SET to other global markets in the future.

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