The Stock Exchange of Thailand (SET) is considering extending the night trading period for gold futures to serve high demand for gold investment amid foreign exchange fluctuations and prospects of slower global economic growth.
Rinjai Chakornpipat, managing director of the Thailand Futures Exchange (TFEX) and the SET's senior executive vice-president, said the TFEX's gold members have asked for an extension of the night trading session for gold futures to cater to high investment demand at night.
At present, the trading period for gold futures ends at 11.55pm.
Gold brokerage firms want to extend the trading hours to 4-5am or adopt 24-hour trade in line with developed markets in Europe and the US.
Details on lengthening the trading hours have not been finalised, Ms Rinjai said.
The SET has a trading system to support longer trading hours, she said, but the bourse has to assess the readiness of other SET members for such an extension.
"Some brokers might not be ready for a trading extension, because their current trading platform is inadequate or it may increase delivery cost," Ms Rinjai said. "The SET will ask all members [about the issue] and prepare the bourse's clearing and settlement system after the market closes."
One possibility is a two-hour extension, but the SET would have to prepare staff who can work after midnight.
Although there are some foreign exchanges that provide around-the-clock gold futures trading, the TFEX will consider the move on a step-by-step basis, Ms Rinjai said.
Nuttapong Hirunyasiri, managing director of MTS Gold Futures, said investors have returned to invest in gold because it's a safe-haven asset against the backdrop of the Sino-US trade disputes, geopolitical uncertainties and the previous setback of the US government shutdown.
On Nov 5, 2018, the TFEX launched a new product called gold online futures (GO), a similar product to gold spot in which the underlying asset is bullion with 99.5% purity and is traded in baht.
GO has contributed to higher gold trading volume, with 8,000-10,000 daily contracts. Most trade is seen at night.
"If the TFEX extends the night trading period by 2-4 hours, we expect the trading volume to increase by at least 30%, and it will rise to 50% if it is 24-hour trading," Mr Nuttapong said.
He said the TFEX should add new investment products to boost the exchange's trading volume, such as silver futures and other agricultural futures products like palm oil, sugar, sugar cane and other types of rubber products.
Classic Ausiris Futures director Boonlert Siripanich said GO has become the most-active trading product because of its suitability for short-term trade, while cash settlement helps boost speculative trading behaviour.
"We agree on extending the gold futures night trading session, as investors can observe sentiment in the Western markets," Mr Boonlert said. "Gold is a global investment product and sensitive towards movements in monetary policies and geopolitical factors."