Thai stock exchange to roll out settlement services platform

THAILAND FOCUS | October 3, 2016

In its steady evolution towards becoming one of the region’s premier capital markets, the Stock Exchange of Thailand announced last week that it will roll out a new platform for settlement services involving mutual funds in the first quarter of next year.

The platform will help level the playing field between small mutual fund companies trying to compete against larger counterparts that have advantages in links to banks and their networks of branches and extensive back office capabilities.  The platform will also be extended to online investors, payment agents, and a sales agent system. Exchange officials said that within the next few years it would also feature options for investment consolidation where investors can have a single account for stocks, bonds, funds and other asset classes.

The Stock Exchange of Thailand (SET) is the second most important exchange in the Association of Southeast Asian Nations (ASEAN) after the exchange in Singapore. SET officials, however, are ambitiously seeking ways to propel the Kingdom’s bourse to the top tier in the eyes of global investors.

The SET has a market capitalization of roughly $460 billion. Through early August, it was outperforming most other stock exchanges across all of Asia, rising over 20 percent since the beginning of this year. More foreign listings and even greater liquidity will be required to make the SET a top tier exchange, but factors that will help achieve that also involve innovations in products, services and systems.

The new settlement services platform is part of overall efforts to broaden and deepen the appeal of the SET for a wide range of investors, both retail and institutional.

In March, SET officials signed agreements with 40 mutual fund providers to participate in the new service platform. The platform will offer a full spectrum of back-office services, including clearing for mutual fund companies and allowing investors to check information at one point.

“The system received a better than expected response. Most large banks will participate in the fund service platform soon,” said Pakorn Peetathawatchai, executive director of the Capital Market Research Institute.

Siam Commercial Bank, one of the top four banks in Thailand, became the first major bank to sign on to the new platform.

Voravan Tarapoom, chairwoman of the Association of Investment Management Companies, said the SET still has a lot of room for continued growth. The number of fund investment accounts is still low compared with the 24.5 million insurance policyholders, she said, noting the country’s total workforce is about 29.5 million.

“Many asset management firms, brokers, insurance companies and banks are interested in this system, which will offer investors easier access to fund trading, and distribution through selling agents,” Voravan said.