SET lays ground for trading in startups

The Stock Exchange of Thailand will roll out a blockchain-based marketplace for trading in startups by the third quarter of 2017.

With blockchain technology, there are no restrictions on trading units and only institutional, high-net-worth and experienced investors such as venture capital funds or angel investors are permitted to trade on the market, said SET president Kesara Manchusree.

Investors in both the SET and the Market for Alternative Investment (MAI), a stock exchange for smaller companies, typically trade in board lots, or units of 100.

The marketplace idea for startups came in response to instructions from Deputy Prime Minister Somkid Jatusripitak, who said the SET should consider a facility for startup fund-raising.

The Securities and Exchange Commission said earlier that the marketplace for startups and small and medium-sized enterprise (SMEs) should be an over-the-counter platform.

Santi Kiranand, senior executive vice-president and chief marketing officer of the SET, said that the marketplace is expected to be extended to SME trades later.

The types of investors are limited for the marketplace of SMEs and startups as they are higher-risk by nature.

"It will be a 'marketplace', not a miniature of the SET and the MAI, where investors generally believe that securities traded are well-selected and regulated," said Mr Santi. "As it [the marketplace] is not a trading board, there is no regulator to verify their quality and investors must make investments by themselves."

But a few qualification requirements for startups that will raise funds in the marketplace will be set.

"The startups that want to mobilise funds from this marketplace must register with the authorities, conduct business with transparency and have a single financial account," he said.

The marketplace will be operated by the SET, said Mrs Kesara, adding that it is working out the details, set to be finalised by March.

At present, the SET operates two trading boards -- the SET and the MAI -- for companies to raise funds.

SET-listed companies are required to have minimum registered capital of 300 million baht, while those listed on the MAI must have at least 50 million.

Those firms listing on the SET must have a track record of combined net profit of at least 50 million baht for the latest 2-3 year period and 30 million for the most recent year.

MAI-listed firms merely need to have turned a profit in the most recent year.