Brokers are asking the Stock Exchange of Thailand (SET) to adjust the rules to allow program trading for only 30-50 big-cap stocks, or set a limit for high-frequency trading (HFT) to prevent a slump on the Thai bourse.
Wikij Tirawannarat, senior vice-president of Bualuang Securities (BLS), said if the bourse wants to review program trading rules, it should consider allowing the practice for 30-50 big-cap stocks.
However, large stocks with a low free float should not be included in program trading because it will cause high price volatility, he said.
The comment follows Deputy Finance Minister Krisada Chinavicharana saying program trading is one reason the SET has slumped during the past few months.
The ministry assigned the Securities and Exchange Commission to study and review the recent impact.
"I'm not sure if robot trading is being used, but I think it shouldn't be because it will affect Thai stocks, causing the bourse to fall while other exchanges around the world have risen," said Mr Krisada.
Mongkol Puangpetra, executive vice-president for strategy research at KTB Securities Thailand, said if program trading was cancelled, it would affect the daily trading value of the SET.
Program trading makes up 35-40% of the total market trading value of the SET, he said.
The practice has been used for a long time and for many purposes, including managing the liquidity of derivative warrants, said Mr Mongkol.
"Modifications should be made at the pain point rather than cancelling the entire system. It will do more harm than good," he said.
Manpong Senanarong, the SET's senior executive vice-president and head of the issuer and listing division, said "it is necessary to study and consider carefully the necessity" of cancelling program trading.
"Every trading tool has both advantages and disadvantages. The advantage of program trading is it is an international tool used globally. All leading stock exchanges use it to help send trading orders on behalf of humans," he said.
For example, Goldman Sachs previously had more than 1,000 employees to take trading orders around the world, but now it has only six employees that do buying and selling of stocks for more than a thousand companies, said Mr Manpong.
Program trading is a tool to help send buy and sell orders for stocks, while investment policies and strategies are still performed by analysts or fund managers.
"If Thailand cancels program trading, how can foreigners invest as there are a few staff to send trading orders, while program trading is used for more than 90% of their orders," he said.