Thailand to Allow New Stock Exchanges, Regulator Says

Thailand will allow new securities exchanges to compete with the state-controlled bourse to lower the cost of raising capital for domestic companies, the Securities and Exchange Commission said.
A law is being drafted to end the Stock Exchange of Thailand’s monopoly on equities and financial derivatives trading, the commission’s Secretary-General Thirachai Phuvanatnaranubala said in an interview in Bangkok yesterday. The exchange said it needs to prepare for increased competition.

The government has pushed the bourse that was founded in 1975 to become profit-oriented and lower share-trading fees to increase its attraction to overseas investors. The exchange plans to sell shares in an initial public offering next year to raise funds for expansion and to compete with regional rivals.

“Thailand will have wide-open competition in operating of stock exchanges,” Thirachai said. “New exchanges will allow companies other ways to raise funds, probably at lower cost.”
New entrants will likely specialize in securities focused on particular industries or companies like the technology-heavy Nasdaq Stock Market in the U.S., he said.




The Stock Exchange of Thailand more than doubled its profit to 456.6 million baht ($14.8 million) in 2009 from 205.5 million baht a year earlier as it cut costs, according to the bourse’s latest financial statements on its website.

'Enhance Efficiency'

“We need to markedly enhance efficiency, strengthen our franchise and expand our customer base to prepare for competition,” Veerathai Santiprabhob, the Stock Exchange of Thailand’s chief strategy officer, said in a mobile-phone text message in response to Bloomberg’s questions.

Brokerages in Thailand have been allowed by the regulator to reduce fees for some stock trades since 2010. Brokerages are able to charge commission of less than 0.25 percent on daily trades of at least 5 million baht.

Exchanges in the Association of Southeast Asian Nations, or Asean, plan to develop cross-border trading links as part of a plan to make the markets more accessible and spur trading. Malaysia and Thailand will start cross-trading of shares by year-end, while Singapore and the Philippines will be next to join, Yusli Mohamed Yusoff, chief executive officer of Bursa Malaysia Bhd., operator of the Malaysian bourse, said Jan. 18.

‘Urgent Need’

“Bourses in the region have seen the urgent need to increase cooperation before slipping off investors’ radar screens,” Thirachai. “The cooperation will probably deepen to a point where those bourses decide to have mutual equity investments among them.”

Alliances among Asian bourses would reflect increased mergers and acquisitions worldwide, including London Stock Exchange Group Plc’s Feb. 9 agreement to buy the owner of the Toronto Stock Exchange for about $3.2 billion in stock. Deutsche Boerse AG and NYSE Euronext are “in advanced discussions regarding a potential business combination,” they said in a statement Feb. 9.

Hong Kong Exchanges & Clearing Ltd. is open to mergers, Lorraine Chan, a spokeswoman for the exchange, said yesterday. Shares of ASX Ltd. rose 4.7 percent yesterday, the most since Singapore Exchange Ltd. agreed to buy the Sydney-based operator of Australia’s exchanges for A$8.35 billion ($8.4 billion) in October.

The benchmark SET Index has dropped 8.1 percent this year, Asia’s fourth-worst performer, after surging 41 percent in 2010. The gauge slid 3.6 percent this week, its worst weekly performance since the period ended May 28.