The Securities and Exchange Commission (SEC), under the leadership of Rapee Sucharitakul, is revamping the way it works by shifting towards outcome-oriented approaches to sharpen its regulatory teeth.
"As the new head of the SEC, my mission is to relay infrastructure for the SEC, as ultimately we want the organisation to remain sustainable in the long term," says Mr Rapee, who has been in the position since May 1.
With power changing hands, the SEC was turned upside down, as the last secretary-general was keen on creating new projects for the capital market. Mr Rapee has returned the focus to the commission's role as a regulatory organisation.
"We are regulators by profession. Our job is mainly to regulate the players and stakeholders in the market using our tool, which is regulation," he says, declining to measure his policy with that of his predecessor.
Regarding capital market regulations, Mr Rapee says the point is not the quantity of regulations but their efficiency in delivering an intended outcome.
Therefore his first task is to review whether the existing regulations are practical enough to accomplish the mission, he says.
"A company once came to us to comment about our website and printed out all our regulations and put them on a trolley. They were stacked to chest level. There is no need to question whether we have enough regulations. The list is enormous. The key question is why such regulations have not achieved their intended outcomes," says Mr Rapee during an interview with the Bangkok Post.
"If we focus only on inputs and outputs but ignore outcomes, our organisation will not be sustainable."
He uses auditors as an example. They represent the third line of defence, and as long as companies are unaware they need to make their accounting transparent, the SEC is unlikely to achieve its intended outcome, no matter how much it tightens the screws on auditors, says Mr Rapee.
"If the chief financial officer who is the front line chooses not to do the right thing, no matter how strictly we regulate auditors we'll find unusual spots in their accounting every time we review it. But if these officers realise they must do their job properly, we don't need to create stacks of regulations concerning them," he says.
Mr Rapee says if the regulations work efficiently in this example, the outcome is a balance sheet that reflects the actual financial status of the company, or what some would call good governance.
In addition, measures implemented must be specific and not blanket, as each company has different conditions and environments.
Metaphorically speaking, the small firm likes the sparse forest where low humidity means it easily burns in the dry season, while the large firm likes the rainforest, where it is hard to light a fire. The big differences between the two kinds of firms led the regulator to question whether the same regulations should be applied to all.
The SEC's new chief has focused on how to improve the surveillance systems to fit each group or category of listed company, ensuring they will bring about the intended outcome.
"We cannot make one size fits all," says Mr Rapee, adding that the regulator is essentially required to have different measures for big corporations and small or medium-sized enterprises (SMEs).
For example, the Market for Alternative Investment, the bourse for SMEs with low liquidity and capital, has set up rules that are far more flexible than the main Stock Exchange of Thailand, he says.
The two markets accommodate far different sizes of companies, so they require different sets of regulations.
Asked whether he will develop measures to control market manipulators who seem to have returned to the markets in recent years, Mr Rapee says even though it has numerous regulations on hand, the SEC is not authorised to enforce the law. Hence, it should focus on preventive measures.
"We are dealing with people's behaviour. We cannot change their behaviour, but we have to understand them in order to find a strategy that makes them hear us. Nowadays people like to listen but hear nothing," he says.
"Investors must understand what game they are playing. If there is damage, they have to bear in mind their fate rests in their own hands."
Mr Rapee says in an advanced developing market, new products are available, but not many people really know what they are or understand their risks.
"They have to know how the products they invest in work, and they have to understand their risk levels and the size of damage they can handle," he says.
In addition to investors and outsiders, the key to a sustainable organisation is participation and strong support from insiders, says Mr Rapee.
He says to ensure the foundation he lays will not be replaced by new core values after his term ends, he needs to confirm that the SEC staff understand their role as regulators.
"This requires adjusting the mindset of people here," says Mr Rapee.
Once he ingrains staff with the new system and they buy in and show participation, the next step is to set new key performance indices for both technical functions and behaviour.
The mission is difficult to accomplish but still possible, he says.
"It will take time, so I don't think you will see a significant change this year. But hopefully by next year, you will see the change," says Mr Rapee confidently.