SET returning to normal short selling rules on October 1

SET returning to normal short selling rules on October 1

The Stock Exchange of Thailand (SET) announced on Monday it will resume normal rules for short selling prices with a zero plus tick and ±30% ceiling and floor limit, effective Oct 1 after market volatility has returned to normal for over a month.

The Thailand Futures Exchange (TFEX) will also reapply the ±30% daily price limit rule, according to a statement SET released on Monday.

The SET revised the ceiling and floor as well as circuit breaker rules on March 18 during high market volatility caused by the pandemic, in line with the tailspin of stock markets globally.

The new volatility rule was originally supposed to last three months, but was extended until Sept 30.

On the SET and Market for Alternative Investment (MAI), normally the ceiling and floor of stocks and investment units is plus or minus 30%, but it was lowered to 15% under the temporary rules. For short selling, the zero plus tick, or price equal to or higher than the last trading price, was changed to an uptick, or using the price higher than the last trading price, under the temporary rules.

On the TFEX the daily price limit was dropped from ±30% to 15% under the temporary rules.

Pattera Dilokrungthirapop, chief executive at DBS Vickers Securities Thailand, said market volatility has returned to normal, pre-pandemic levels at about 15-20% per day, down from over 100% per day in March and April.

She said the bourse can adequately handle this level of volatility.

The market trading value this month is also slightly down to around 40-50 billion baht per day, lower than the average trading of about 60 billion per day for the first seven months this year.

"The pandemic still remains a fear among investors as long as there is no vaccine, and the economic slowdown is a negative factor, but everyone recognises these risks," Ms Pattera said. "If there are no other incidents to pressure the market for the rest of the year, we believe the previous trading rules are appropriate."

Terdsak Taweethiratham, executive vice-president of Asia Plus Securities, said the market remains uncertain because of the ongoing pandemic in Asia, as India and Indonesia have not controlled their outbreaks, while Myanmar just announced a fresh lockdown. There is still not a vaccine, said Mr Terdsak.

Rising domestic political tensions could affect the market over the next month, he said.

"The SET should extend the volatility rules until the situation returns to normal, however I believe the SET can handle the high volatility and will take proper measures to look after the market," Mr Terdsak said.

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