SEC confirms health of the securities industry
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SEC confirms health of the securities industry

The Securities Exchange and Commission (SEC) has verified the securities industry remains strong, with every company having adequate capital funds as required by law, and 98% of them having minimum funds two times above the requirement.

SEC deputy-general Anek Yooyuen said all securities firms maintained capital funds exceeding the minimum requirement, with 98% holding capital funds twice the minimum level.

As of May 27, all the companies have net capital rules (NCR) sufficient to pay off all debts to customers, he told the Bangkok Post.

Mr Anek's comments followed a recent news report that the Thai unit of GMO-Z com Securities, a Japanese securities brokerage, would shutter operations as the trading value of the Stock Exchange of Thailand (SET) has dropped drastically over the past three years.

GMO-Z com Securities (Thailand) said on its website it remains open for business as usual.

According to data from the Association of Securities Companies (Asco), the average daily trading value on the SET has declined for more than three consecutive years from 88 billion baht in 2021 to 42-47 billion year-to-date.

Commission fees have plunged because of stiff competition among securities companies, leading to losses for small players.

"The SEC has looked into the capital fund status of securities companies on a daily basis and supervised their work systems in many aspects, such as risk management and maintaining customers' assets," said Mr Anek.

"This should assure investors that securities companies have a working system and the ability to provide services continuously, following circumstances that affected the business of securities companies."

According to the SEC, securities companies had average net capital per company of 1.99 billion baht as of the end of 2023, with the industry's average NCR at 139%.

The minimum criteria require securities companies to maintain an NCR of more than 25 million baht for companies conducting both securities and futures businesses, and more than 15 million if operating only a securities business or futures contracts.

Securities companies are required to maintain an NCR of more than 7% of general liabilities and assets that customers place as collateral for trading futures contracts.

Asco revealed the net profit of Thai securities companies plunged 35.4% last year to 3.8 billion baht, attributed to reduced brokerage income, losses incurred from securities trading and a decrease in underwriting fees.

Return on equity fell to 3.1%, the lowest since 2007, from 4.6% in 2022 and well below the 10-year average of 9.2%.

The average commission rate for equities (excluding proprietary trading) was 0.066%, down from 0.71% in 2022.

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