The amended Securities and Exchange Act of 2019 will change Thailand's capital market landscape by inducing greater competition through new market participants and scripless securities issuance, says the Stock Exchange of Thailand (SET).
New players, including local and foreign companies and exchanges, are poised to enter the domestic securities industry as the amended Act supports such change, said SET president Pakorn Peetathawatchai.
Under the Act, which came into effect on April 17, direct market access by a private exchange for trading securities, such as dark pools, allows the opportunity to apply for a securities trading licence in Thailand's capital market.
The SET board of directors may allow persons other than a securities company that is a member of the SET to purchase or sell a particular type of listed securities on the SET, according to the Securities and Exchange Commission (SEC).
The Act also stipulates that no member of the SET shall purchase or sell listed securities outside the SET, unless obtaining permission from the SET or such purchase or sale is made in compliance with rules, conditions and procedures specified by the type of securities licence granted, according to the SEC.
A dark pool is a private financial forum or exchange for trading securities. Dark pools allow investors to trade multiple assets, such as stocks, derivative warrants and depository receipts, without exposure until after the trade has been executed.
It is too early to assess the changes because no new exchanges have applied for a securities trading licence except for a few local digital asset exchanges, which received authorised licences to operate their digital asset business under the digital asset royal decree, said Mr Pakorn.
"The challenge under the amended Act is a change in the ecosystem. The SET will face greater competition because there will be new players involved with direct market access and an electronic trading platform, as well as unlocking licences for scripless securities depository," he said.
A licensed depository centre can provide services through a scripless system for all types of securities, according to the amended Act.
The bourse's long-term development strategy is focused on developing the digital asset ecosystem, with a protocol trading system for digital assets expected to be completed in the final quarter, said Mr Pakorn.
Traditional securities trading will remain the SET's core business, he said.
The SET's structure will also change as stipulated by the amended Act.
For the bourse's board of governors, the SEC can appoint no more than six persons, while members of the SET, or brokerage firms, are allowed to select four persons, with the SET president as ex officio board member.
SET members may also elect up to two foreigners to the board of governors if certain SET operations require specialised knowledge, according to amendments.