Thailand 1 Liberalization on Cross Border Access: Thai SEC’s Policy Response

Thailand 2 I. Thai Securities Industry in Brief  There are 39 securities firms:  Relatively small size firms with total assets (per firm) less than USD 300 mil.  Almost all securities firms concentrate on broking business: 70-80% of total revenue  Customer base is dominated by retail investors: 70-80% of equity trading volume  17 foreign subsidiaries  13 bank/finance subsidiaries  9 stand alone  Foreign investor group contributes to about 20-25% of equity trading volume and about 30% of holding

Thailand 3  Liberalization  Globalization II. Challenges for Changes: Globalization, Liberalization, and Consolidation are Common Trends of Developments in East Asian Region  Linkage between exchanges:  SGX and ASX launched co-trading link in 2001  SGX traded AMEX-listed ETF in 2001  Commission rate:  SG in 2000  HK in 2003

Thailand 4 II. Challenges for Changes:  Merger:  stock brokerage: MY in 2004  Financial services:  adopt a single license regime: SG in 2002 HK in 2003  allow financial institutions to do agency services: JP in 2004  Consolidation  Foreign ownership:  consolidate stock brokerage: MY started in 2000  merging exchanges : SG, MY, etc.

Thailand 5 III. Measures Taken to Accommodate Regional Developments (By Thai Authorities)  liberalize MF license in 2002  liberalize foreign ownership in securities firms; 100 % foreign ownership is allowed  Toward liberalization:  Foreign Investment Funds (FIF) scheme in 2002  Toward globalization:  launch various schemes to facilitate cross border investments asset management companies are allowed to invest abroad with initial aggregate ceiling of USD 200 mil. additional aggregate amount of USD 500 mil. was granted in 2004

Thailand 6 III. Measures Taken to Accommodate Regional Developments  Scheme for qualified domestic institutional investors in 2003 institutional investors are allowed to invest in sovereign bonds issued abroad  Baht bond scheme in 2004 allow international financial institutions to issue baht bond ADB issue ฿ 4,000 mil. baht bond in May 2005

Thailand 7 IV. Policy toward Further Changes in Liberalization  Strengthen securities industry  Widen business activities; encourage diversification of revenue sources: SBL, Repo, derivatives, etc  Reconsider to liberalize brokerage commission  Consider to allow foreign securities offerings in domestic market via local brokers  allow cross border services to institutional investors for OTC derivatives dealing

Thailand 8 IV. Policy toward Further Changes in Liberalization  Co-operate in Regional Integration Activities/ Projects  Harmonize and mutual recognize regulations under Asian Forum, such as Asian Capital Market Forum (ACMF)  disclosure requirements  accounting and auditing standards  distribution rules  cross-recognition of qualification of market professionals

Thailand 9 IV. Policy toward Further Changes in Liberalization  Actively participate in the project of Asia Bond Mutual Funds; working on the issues of  mechanism of issuing, selling, managing the funds  relaxation of regulations on tax and capital control  Paving the way for cross-border trading of mutually acceptable investment funds, such as Letter of Intent on mutual recognition between TH SEC and HK SFC