The trading volume of derivative warrants (DWs) on the Stock Exchange of Thailand (SET) this year is expected to be similar to 2016 due to lower volatility in the Thai bourse, says Macquarie Securities (Thailand) Ltd.
Although SET50 DW is usually the most popular among DW products, narrow movement in the SET index during the first eight months has induced SET50 DW trading to drop lower than 50% of the segment, with investors turning to single stock DWs, said Noppadon Duangthipnest, associate director and head of derivative sales at Macquarie Securities.
"If the [stock] market is more volatile, SET50 DW [trading] will be the most active. [But] when the market is stable, investors will shift to invest in single stock DWs," said Mr Noppadon.
It is difficult to predict whether the Thai bourse will stay above 1,600 points or if a market correction will occur, as sentiment depends on domestic and global developments, he said.
Since the trend of Thailand's overall stock market and large-cap stocks are less volatile, Macquarie Securities will consider launching DWs based on stocks in the SET100 or mid-cap stocks having high trading volatility, so that investors can see the pricing direction clearly, said Mr Noppadon.
Investors in Thailand typically favour DWs which have 2-4 months in maturity and provide a high level of return with minimal investment quantity, said Mr Noppadon.
Macquarie Securities currently has a 20% market share for DW trading, coming behind Bualuang Securities and KGI Securities. The company aims to increase its market share to 25-30% next year through its "Grow Your Success" campaign, which offers a simplified DW investment tutorial.
Rinjai Chakornpipat, managing director of Thailand Futures Exchange (TFEX) and SET executive vice-president, said daily average trading of DW products in 2016 tallied nearly 5% of total market trading value, or 2.6 million baht.
The SET has allowed securities firms to issue DW products for seven years.
The most popular trading destination for DW in Asia is Hong Kong, with daily average trading logging 15-20% of total market trading value, followed by Taiwan, said Ms Ringjai, adding that Malaysia and Singapore remain in the early stages of DW trading.
Separately, the Securities and Exchange Commission (SEC) has rolled out a regulatory sandbox for the electronic trading platform to facilitate stock trading for startups, said deputy secretary-general Tipsuda Thavaramara.
"Such regulations have just passed the public hearing process and await the SEC chairman's signature in order to be promulgated in the Royal Gazette," she said.
There are two business operators, Private Chain and Live, which are ready to operate on the electronic trading platform related to blockchain technology, said Mrs Tipsuda.