Regulation

Thai exchange extends NVDR order adjustment period

The Stock Exchange of Thailand (SET) has changed its post-trade procedures for non-voting depository receipts (NVDRs) to ease back-office headaches for foreign investors.

SET introduced NVDRs in November 2010 as part of a plan to increase market capitalisation from new listings and increased foreign investment. NVDRs are designed to help eliminate barriers for foreign institutions wishing to invest in Thailand's listed firms, but which are prevented from doing so directly, usually due to the limited proportion of shares available to foreign investors.

Since nearly all SET shares have a pre-set limit on foreign ownership, international institutions were sometimes faced with high premiums. NVDR holders receive financial benefits, such as dividends, right issues and warrants, but typically have no voting rights.

From 1 August, order adjustment will be allowed after settlement for securities traded over the last three months, rather than the current limit of three days after trading. In addition, fees for order adjustment will be cancelled. The procedure is reserved for post-trade NVDRs between broker members and SET.

“The improvement will make NVDR trading more convenient and reduce limitations and obstacles encountered,” said Charamporn Jotiskathera, SET president. “This will the cut operating costs of securities firms as well as custodian banks.”