Asian trading venue the Stock Exchange of Thailand (SET) has set out an expansive new strategy for 2011 to grow its business and increase competitiveness, in preparation for its impending demutualisation next year.
The plans aim to increase market capitalisation by approximately US$33.33 billion (THB100 billion) from new listings, and to increase investment through the introduction of non-voting depository receipts (NVDRs) – a new trading instrument for the exchange, designed to eliminate investment barriers for foreign institutional investors.
Since nearly all SET shares have a pre-set maximum limit on foreign ownership, on popular Thai shares this often gets filled quickly meaning that in the past, foreign institutions paid hefty premiums for Thai shares. The ability for foreigners to own NVDR shares provides an alternative, making the market much more accessible to foreign investors than was previously the case.
“SET will increase the investment of Chinese and Japanese institutional investors,” said Charamporn Jotikasthira, SET president, adding that the exchange plans to new products including oil futures, silver futures, transferable custody receipts and new exchange-traded funds in 2011. “SET will raise its market capitalisation by THB100 billion from new listings, especially in the insurance, telecommunication, automobile and auto parts and energy and alternative energy sectors,” he said.
The exchange also intends to expand its post-trade services by allowing current clearing member companies to clear for other members, including becoming members of foreign securities depositories to support cross-border securities clearing, as part of the ASEAN linkage and dual listings plan.
Other initiatives by the exchange include plans to expand the trading hours of gold futures to overlap with the New York Stock Exchange to increase US investment opportunities, a drive to encourage clients to use Internet trading, and developments to the venue's IT system.
“This focus will help product launches and service enhancements to be done more quickly and increase the quality and standards of the Thai exchange to be world-class,” said Charamporn.
The Thai exchange recently signed a memorandum of understanding with the newly established Lao Stock Exchange, in October 2010. The venue, which saw a significant rise in electronic execution in the first half of 2010 compared to 2009, has also sent out an invitation for bids to replace its cash equities system with a new, low-latency platform that would also be capable of market surveillance and data services.