SEC seeks reform for SET board

SEC seeks reform for SET board

Move part of stock exchange revamp

"The SET realises blockchain could change its business operation and adaptation is necessary," said Rapee Sucharitakul SEC secretary-general.

The Securities and Exchange Commission (SEC) has sought the Finance Ministry's permission to increase the number of board seats on the Stock Exchange of Thailand (SET) to six from five as part of the stock exchange reform.

If the board revamp is approved, the number of the SET's board of governors to be named by brokers will be reduced from five to four.

Stock market stakeholders including the Association of Investment Management Companies, the Government Pension Fund, other institutional investors and retail investors will nominate who sits on the board under the regulator's quota, while the SEC's board will pick what it terms "public directors", said SEC secretary-general Rapee Sucharitakul.

"There is no change in the way the board operates. The amendment is only to make clear, by law, how the board is appointed and the ratio between public directors and directors named by brokers," he told the Bangkok Post in an exclusive interview.

The SET's board of governors consists of 11 members. Currently five are appointed by the SEC, another five are picked by brokers and one is the SET president. The board votes to select one of its 11 governors as SET chairman.

The board of governors is responsible for appointing the SET's president. It also plays a crucial role in setting the SET's direction, appointing its tasks in formulating stock exchange policies and supervising operations.

Capital reform is the next issue the SEC will push forward. Since taking the helm in May last year, Mr Rapee has focused on clearing the securities watchdog's unsettled cases involving allegations of unfair securities trading practices by listed companies' executives and board members, as well as tightening the enforcement of regulations.

The SEC in late 2015 fined three top executives of the 7-Eleven convenience store chain operator CP All Plc and an executive of True Corporation Plc a combined 33.3 million baht for using inside information to benefit themselves. CP All executive chairman Korsak Chairasmisak, vice-chairman Piyawat Titasattavorakul, vice-chairman Pittaya Jearavisitkul and True vice-chairman Athueck Asvanund used insider knowledge to buy shares of cash-and-carry giant Siam Makro Plc ahead of CP All's announcement it would buy out Makro at an above-market price.

That case prompted public calls for tougher penalties to be imposed against listed companies' executives and board of directors who are involved in unfair trading.

Mr Rapee said the SET, according to the SEC's proposals, will still have no shareholders and it will not be demutualised.

"The amendment only clarifies the regulation role and duties of the SET," he said.

The SEC's proposal is one of three possible options discussed by the Federation of Thai Capital Market Organizations and the Finance Ministry's Capital Market Development Committee after Finance Minister Apisak Tantivorawong recently floated the idea of a clearer ownership structure to sharpen the bourse's competitiveness, including a government ownership stake.

The three choices are the SET will have shareholders; it will continue with no shareholders but with a change in board structure; or no change in board structure or shareholders.

The SEC's proposal is one of several draft bills governing the SET that are pending Fiscal Policy Office consideration. If the Finance Ministry gives the nod to a revised bill, it will go before the cabinet before forwarding to the National Legislative Assembly for deliberation.

Mr Rapee said the SEC has also proposed to allow an allocation of 8 billion baht from the SET's Capital Market Development Fund to finance enhancing financial literacy among people and upgrading workforce efficiency in the capital market.

The proposed bill will also give a mandate to the SEC to execute securities trading orders by any parties outside the SET to prepare for the imminent blockchain technology, a process allowing stock trading orders to be matched between brokers without the need for an intermediary or bourse, he said.

Even though Mr Rapee insisted the amendment is aimed at paving the way for the advent of blockchain, it is unavoidable that such a move poses a risk to the SET as it could lose its monopoly advantage. He said the SET realises this could change its business operation and adaptation is necessary.

"The amendment is to prevent an obstruction. How each party adjusts to the technology is up to them," said Mr Rapee.

The SEC keeps its regulatory and investigative roles for irregular stock trading.

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