Many small and mid-cap listed firms will experience difficulty in meeting foreign investors through roadshow events once the Markets in Financial Instruments Directive II (MiFID II) comes into effect, due to the use of investors' preference selection.
As MiFID II began implementation early this year, foreign investors will request the Stock Exchange of Thailand (SET) and securities firms to provide greater details on roadshow expenditures, along with a list of targeted firms in which they are interested, said Santi Kiranand, SET senior executive vice-president.
In the past, securities firms charged a commission fee from foreign investors, including travel expenses, research, and other ground costs, without providing all the relevant details, said Mr Santi.
Many small and mid-cap listed firms will have difficulty meeting foreign investors because the investors only want to meet with large-cap companies, he said. The smaller firms are unlikely to provide information on transaction costs, making investors less keen.
MiFID II is EU legislation from the European Securities and Markets Authority that regulates firms providing financial services to clients linked to financial instruments and venues where those instruments are traded.
The rule only applies to EU countries from 2018, intending to offer more protection for investors and enhancing transparency in all asset classes.
Markets outside the EU have not adopted this regulation. However, securities companies that are doing business with European fund managers are required to set unbundling fees in accordance with MiFID II to serve European customers.
In an attempt to address this issue, the SET can provide investment information and workflow through the SET Digital Roadshow to help listed firms and foreign investors to meet via a social media platform, said Mr Santi.
The SET Digital Roadshow will be organised next month via a real-time live broadcast. The event will be held twice a year, in March and November, starting from this year.
"We hope this channel will be a [digital] international roadshow for small and mid-cap companies to attract more investors, while large-cap firms can meet investors in offshore markets as most of them have already complied with MiFID II," said Mr Santi.
The SET usually schedules about 4-5 international roadshows, bringing about 9-10 SET-listed companies to meet face-to-face with foreign investors. European roadshows usually comprise 1-2 events.
The new EU regulatory framework requires greater transparency from banks and companies involved in the financial realm by requiring they stipulate every transaction cost, while helping limit trading in dark pools such as private exchanges or forums for securities trading, said Mr Santi.