SET to extend revised short-selling rules

SET to extend revised short-selling rules

(Photo by Pornprom Sattrabhaya)
(Photo by Pornprom Sattrabhaya)

The Stock Exchange of Thailand (SET) is set to extend the revised equity short-selling regulations to Sept 30 from June 30 as stock market volatility remains high in the wake of the Covid-19 pandemic.

The planned extension also covers the revised ceiling and floor limits of securities products traded on the SET index, the Market for Alternative Investment (MAI) index and Thailand Futures Exchange (TFEX).  

The bourse is conducting a public hearing until May 25 for opinions from market participants on the move.

The rules initially took effect from March 13 and were scheduled to expire on June 30.

SET members must short-sell stocks only at a price higher than the last trading price. Previously, the SET allowed members to short-sell stocks at a price not lower than the last trading price. 

Shorting, or short-selling, as defined by MarketWatch, is when an investor borrows shares and immediately sells them, hoping to scoop them up later at a lower price, return them to the lender and pocket the difference.

Shorting is much riskier than buying stocks, or what is known as taking a long position.

The ceiling and floor limit for stocks, investment units, warrants, derivative warrants, exchange-traded funds, treasury stocks and depository receipts traded on the SET and MAI indices have been revised to plus/minus of 15% from 30% of the previous closing share prices.

The ceiling and floor limit for foreign shares traded on the SET and MAI indices have been revised to plus/minus 30% from 60%.

For index futures, options, sector futures and single stock futures traded on the TFEX, the ceiling and floor limit for these securities have been revised to plus/minus 15% from 30%.


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