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Overview of Operations in 2015
Values, Organizational Restructuring, and Revision to Work Processes
Creating Stability and Confidence in the System
Up to date, Prepared, and Ready to Leverage Technology
Improving Linkages Between Capital Markets
Increasing Competitiveness to International Standards
Competitiveness and Resilience of the Securities Businesses
Development of Listed Companies
Develop Competent Investors and Equip the General Public with Skills in Utilizing the Capital Market for Financial Planning
Fraud Supervision and Regulatory Enforcement

2015 marks the year the SEC laid the foundations to further develop the ecosystem of the capital market by adopting multiple approaches to promote sustainability of the Thai capital market.


Values, Organizational Restructuring, and Revision to Work Processes


To create a workforce driven by the same clear goals, possessing genuine understanding of the purpose and role of the SEC, the organization's mission, vision and values received a fresh update in 2015.  The SEC entered a new stage characterized by "Open, Insightful, Collaborative, Integrity" which began with an organizational restructuring to regroup function lines.  The revision let work be handled from end-to-end which strengthens the staff's understanding of the entire process, improving response to stakeholders' needs.


We revised our operations to obtain a more inclusive view of all stakeholders, helping us gain deeper insights into the actual problem and the root causes.  Revisions were made to both work flows and related communications.


As part of the work flow revision, the SEC improved procedures for conducting public hearings to ensure that regulations enacted are indeed effective and embraced by all, while mitigating unintended outcomes.  Stakeholder analysis helped define relevant groups more clearly.  We engaged stakeholders early when seeking feedback on new ideas.  Multiple channels and methods were used to suit intended audience; documentation designed for easier understanding.  Objectives were stated clearly.  Once regulations were drafted, steps were taken to draw in feedback again.  Gathering of feedback was allotted a longer period, allowing sufficient time to digest the issues thoroughly.  Views were also subsequently consolidated for display on the SEC website.


Improving communications was another target area.  While management executives and staff typically engage stakeholders on different occasions, we pooled our knowledge through regularly scheduled meetings as well as ad-hoc sessions where there were chances to openly exchange opinions.  Final views and proposals were also fed into the SEC's strategic plans.

Creating Stability and Confidence in the System


In formulating the SEC's business plan, we took into consideration global trends and other ecosystems to understand prevailing conditions and derive the proper approach to our work.  Critical are factors that could affect the stability and confidence in the system such as (1) volatility of capital flows resulting from uneven economic recovery of various nations and pursuit of different monetary policies, geopolitical risks in certain regions, (2) opportunities created by technological advances is inevitably accompanied by threats from cybercrime.


In response to aforementioned threats, the SEC aims to strengthen market stability and resilience.  We (1) revised the capital requirements for securities companies and asset management companies to cope with market volatility, (2) strengthened guidelines on IT security for businesses to prevent cybercrime and (3) updated test scenarios and factors to test resilience against systemic risks and conducted stress tests.  Results indicated that no businesses face such problems.


The bomb blast at the Rachaprasong Intersection in downtown Bangkok in 2015 subjected the system to an actual crisis situation.  Sentiment was further compounded by the sharp drop in China's stock market.  Both events took place in close proximity in the month of August and had potential to adversely affect the Thai economy and capital market, especially psychologically.  Sufficient readiness and collaboration from all parties kept the Thai capital market composure's intact.  The SET and securities companies continued to operate normally and the overall market was not adversely affected.

Up to date, Prepared, and Ready to Leverage Technology
Huge advances in technology bring opportunities and new channels to offer financial services (Financial Technology or FinTech).  New players emerge using technology to create new financial products and services to cater to a wider range of customers, even enabling previously unserved customers to access market-cost capital swiftly.
The SEC has been embracing FinTech to help improve financial inclusion for those who cannot yet tap the capital market.  After considerable preparation, the SEC issued guidelines to support fundraising online or equity crowdfunding.  This will enable small companies or startups to obtain affordable cost long term capital for the first time and an ability to compete.  With many operators expressing interest in becoming funding portals, services may debut in 2017.
Furthermore, the SEC has been also examining the potential use of FinTech to transform products and services, including supervision of the capital market.  Technology could provide an alternative to a human operator, for instance, letting a computer application construct an investment portfolio automatically.  Blockchain Technology, which is secure, inexpensive, and does not require an intermediary.  It has the capability to transform stock market activities such as settlement and delivery.  Big Data Analytics is another phenomenon which could be used to analyze securities trading patterns.
The SEC organized the FinTech Forum, bringing together FinTech startups to share their experiences.  The venue also drew those interested in setting up a business to consult with the SEC.
Apart from the advantages of FinTech, the SEC has been also monitoring the effects such as disintermediation, as traditional financial services are increasingly circumvented.  They will need to adapt or move ahead of the game. As mentioned, cybercrime can threaten market stability.  Investors themselves, need to be thoroughly aware of the pros and cons of new services created by FinTech.  The SEC will strive to build readiness in all segments of the capital market.

Improving Linkages Between Capital Markets 

 In another notable global trend, countries are increasingly highlighting the strength of their capital market, creating linkages, and forming alliances to establish common rules and facilitate product distribution among member countries.


The Thai capital market and its business participants need to demonstrate their strengths to attract global investors, particularly capturing the opportunity to serve as a gateway to the Greater Mekong Subregion (GMS).  By being a so-called GMS Connector, Thailand could be a fund raising hub offering quality GMS financial products to international investors.


The SEC has been pushing forwards on many fronts such as encouraging and creating channels for the issuing of foreign financial products, especially from GMS countries, in the Thai capital market.  We also created frameworks to support depositary receipts (DR) with GMS securities as the underlying, helping improve the liquidity of GMS stock markets.


Furthermore, the SEC revised guidelines to permit retail funds to invest in GMS countries without portfolio weighting restrictions.  Emphasis will gravitate towards good disclosure of risk information in the filing application, providing investors with sufficient data to make a suitable investment decision.


The SEC also issued guidelines for the establishment of Infrastructure Trusts to raise funds for Thai and regional infrastructure projects, particularly assisting GMS companies to mobilize funds.  Foreign companies are now permitted to seek a primary listing on the Stock Exchange of Thailand.  Furthermore, foreign listed companies can issue a secondary listing here.


The SEC was also promoting foreign investment in Thai unit trusts by recently entering a Statement of Understanding (SOU) with Australia, New Zealand, the Philippines, Japan and South Korea in the APEC Asia Region Funds Passport (APEC ARFP) scheme.  The scheme assisted the distribution of each other's fund products.  We also encouraged fund distribution in Europe under the Alternative Investment Fund Managers Directive (AIFMD) as well.

Increasing Competitiveness to International Standards

Transparency and integrity are essential qualities to draw international investors and issuers to the Thai capital market. Endorsement by a respectable body would increase confidence that the Thai capital market is on par with international standards.











The Thai financial sector is therefore preparing to be assessed by the Financial Sector Assessment Program (FSAP) in the latter half of 2018 to early 2019, a program jointly administered by the World Bank and the International Monetary Fund.  Similarly, the effectiveness of the SEC's supervision of the capital market will be assessed by International Organization of Securities Commissions (“IOSCO”) while the quality of settlement processes would be jointly reviewed by the Bank for International Settlements and IOSCO.


Competitiveness and Resilience of the Securities Businesses
One contributing factor to the Thai capital market's growth and sustainability is the participants' growing competitiveness.


To increase the caliber of asset management companies and maintain industry growth, the SEC revised regulations regarding investments by funds with the intention of strengthening the asset management business' ecosystem.   We are now allowing funds greater flexibility to invest, in alignment with international norms and the market's direction.  Yet, investors will receive the same level of protection.  Funds receive greater flexibility regarding investible assets.  Guidelines are now more concept-based, prescribing asset classes and characteristics of securities rather than specifying actual types of instruments.  Funds also have a broader discretion regarding investments and risk exposures.  For instance, a retail fund may invest in an infrastructure fund not listed on the SET despite the target fund not originally issued to retail investors.  Investment is permitted within allowed limits, whereas old regulation restricted investments to just infrastructure funds that listed in SET or offered to retail investors.


Deregulation was also extended to provident funds.  The investment limit in property funds or infrastructure funds was doubled from 15% to 30% of net asset value when aggregated with alternative investments such as commodities.  Other flexibilities allowed provident funds to design portfolios as sector funds and impose any necessary investment limits at the individual member level instead.  This also provided greater selection for provident fund members as we increase the market’s sophistication and align with international norms.  We also prescribed greater investment diversification, revised product limits for certain investments to reflect market conditions and removed product limits for investments by mutual funds.
Regulations for investments in derivatives were also revised in line with international norms, such as calculations of investment limits for derivatives and classification of fund types to better illustrate the risk exposure.  Emphasis will now be on net exposure rather than value of investment in these derivatives.  Investment limits in various derivatives were also revised to better suit fund types which vary in risk.


Another important milestone in 2015 was the merger of Agricultural Futures Exchange of Thailand (AFET) and Thailand Futures Exchange (TFEX) to raise efficiency and take benefit through economies of scale.  A single bourse also makes it easier for investors.  The system should become more robust as we lift agricultural futures trading standards and supervision of business participants to international levels, thereby strengthening confidence in custody, settlement, and delivery.


Development of Listed Companies







Listed companies play an integral role in the economy, creating jobs and improving income distribution.  The SEC is supportive of the advancement and sustainable growth of listed companies.  We encourage companies to possess corporate governance in substance, social responsibility, and adopt anti-corruption practices.  Listed companies can be role models for other companies to aspire to.


A satisfactory achievement in 2015 was the continued solid improvement in the results of the Anti-corruption Progress Indicator for listed companies (for more details, refer to "Anti-corruption in the Thai Capital Market").


The SEC and related authorities are teaming up to develop an Integrated Governance Framework to assist companies to blend corporate governance into their operations in a practical manner.  Courses and seminars have been updated to equip company directors on leadership roles and creation of effective boards.  Furthermore, in collaboration with the Thai Institute of Directors and the Federation of Accounting Professions, we are revising training courses to enhance the quality of independent directors.


The SEC also puts considerable emphasis on the quality of financial reporting by listed companies since information is valuable to investors.  Realizing that a good ecosystem hinges on quality financial reporting, the SEC and the Federation of Accounting Professions has jointly developed courses for practitioners that prepare financial accounts and reports. We also emphasized the importance of financial reporting to the management of listed companies through various means to build understanding on this matter.


The quality of Thai listed companies is gaining recognition on the international stage with commendable rankings at the recent ASEAN Corporate Governance Conference and Awards held in the Philippines.  Among the 50 companies with the highest ASEAN CG Scorecard points, 23 were Thai listed companies; two were in the top five.


The Organization for Economic Co-operation and Development (OECD)'s granted the honor for Thailand to host the OECD - Asian Roundtable on Corporate Governance conference for 2015.  The forum's agenda included strengthening corporate governance in the region, discussion of challenges and shortcomings, as well as sharing perspectives through case studies.  The forum drew more than 150 participants consisting of management, representatives from government agencies and the private sector, both domestic and foreign.  The forum also marked the launch of the OECD's new "Principles of Corporate Governance" which was freshly updated to reflect the changed business environment and global capital markets.  It will serve as an important reference for the development and assessment of corporate governance worldwide.

Anti-corruption in the Thai Capital Market
The SEC's work prescribed by the Sustainability Development Roadmap for listed companies has been encouraging listed companies, since 2014, to operate their business with social responsibility and good governance.  Policy direction also called for listed companies to be genuinely committed to fight corruption, which could result in listed companies being viewed as change agents to inspire businesses in other sectors to stand up against corruption.
The SEC required listed companies to announce their anti-corruption policy and measures in the annual registration statement (form 56-1) document filing and information disclosure prescribed by the application for an offer for sale of shares (form 69-1) as of 1 January 2014 onwards.  We encouraged securities and derivatives companies to establish an anti-corruption policy and prescribe measures as well. 
To aid investors and the public interested in this matter, the SEC supported the Thaipat Institute's creation of the Anti-corruption Progress Indicator which classifies the effectiveness of an organization’s anti-corruption measures into five levels.  Joining the Private Sector Collective Action Coalition Against Corruption will be positively viewed in the assessment as well.
1 - Committed
Indicating commitment of top executive and the organization with board of directors’ resolution and policy not to involve with corruption.
2 - Declared
Indicating determination by means of declaration to join Collective Action Coalition (CAC) Project by Thai private enterprises.
3 - Established
Indicating policy to oppose bribing government officials and those related to corruption as well as policy to communicate and educate employees regarding anti-corruption policy and practices.
-  3A : Established by Declaration of Intent
-  3B : Established by Internal Commitment and Policy
4 - Certified
Indicating an implementation audited by audit committee or SEC-approved auditor, a certification by CAC or an audit by independent external organizations.
5 - Extended
Indicating anti-corruption policy which extends to business partners, consultants, intermediaries and business representatives.
The Thaipat Institute reviewed listed companies in 2014 and 2015, and included market intermediaries in 2015 too.  The latest results completed on 2 December 2015 revealed that most listed companies and intermediaries progressed substantially in their preparations to prevent corruption in organizations.  The review of 583 listed companies showed that 542 companies (92.97%) attained a level of 1 or higher, compared with 344 in 2014 (60.70%), an improvement of 198 companies (32.27%).  Among these figures, 13 companies (2.23%) achieved the highest level of 5.  The review of 71 intermediaries (included eight listed companies) found that 66 companies (92.97%) had a level of 1 or higher while 29 companies (40.85%) achieved a level of 4.  Results of the Anti-corruption Progress Indicator is available at  and
In addition to our aforementioned work on anti-corruption, the SEC collaborated with other partners on many important issues:
(1)  Thai Investors Association:   Train rights-protection volunteers on questioning techniques to effectively probe companies about their anti-corruption measures at annual general shareholder meetings.  The program has been running since 2014.
(2)  Institutional investors through collaborative work with their respective associations such as the Association of Thai Securities Companies and the Association of Investment Management Companies:     Monitor and probe listed companies on their anti-corruption efforts and measures at annual general shareholder meetings; a program running since 2014 as well.
(3)  The securities companies and derivative businesses:   Request that analytical reports also disclose the listed company’s Anti-corruption Progress Indicator score.  Furthermore, investment advisors were also encouraged to furnish this information to help investors make better decisions.
(4)  Asset management companies:    Seek cooperation in disclosing their own Anti-corruption Progress Indicator score in fund fact sheets and disclosure reports for funds under management.
(5)  Anti-corruption Organization of Thailand (ACT):  Grant financial support for their launch of a new program entitled ACT Good which aims to promote a visual symbol to raise anti-corruption awareness widely among consumers.  Qualified companies will be eligible to display this ACT Good logo on their products.















Develop Competent Investors and Equip the General Public with Skills in Utilizing the Capital Market for Financial Planning  


The general public should have the opportunity to access the capital market, armed with knowledge and ability to benefit from investing in it to achieve sufficient well-being in life.
The SEC emphasizes the importance of providing investors with the ability to stand up for their rights and protect themselves.  We are currently working on disseminating knowledge to investors on the topics of (1) investors’ rights (2) bondholders’ rights (3) unitholders’ rights (4) intermediaries customers’ rights, all of which will encourage retail investors to exert their rights.
The SEC pressed for changes to the Provident Fund Act, observing the need to prepare for our aging society and for citizens to have sufficient financial well-being.  Revisions to the Act will create needed adjustment to the ecosystem as members currently tend to "save little, save temporarily, and save ineffectively."  To encourage members to "save more, save continuously, and save competently," the ACT is now permitting them to increase their employee savings contribution rate beyond the employer's contribution rate.  Alternatively, they could also transfer their balance from a provident fund to a RMF to maintain continuity for their investment.  If an employee does not select an investment choice, the provident fund committee may pick one that is suited for that employee, such as progressively reducing the member portfolio's investment risk as the employee ages (Life Path).
Other programs were also being administered to boost financial literacy to enable citizens to achieve financial security and prepare for retirement by building awareness of the importance of financial planning.  The Financial Literacy in Workplace program equipped the working-age segment of the population with skills on financial discipline and financial planning.  Training was provided to 131 companies.  In addition, we are collaborating with the Stock Exchange of Thailand to set up ways to increase financial literacy regarding financial planning and investing for retirement to be targeted at the provident fund segment.  The Stock Exchange of Thailand will launch these programs in 2016.
We also conduct activities promoting financial literacy at various events.  For example, at Money Expo 2015, our booth showcased the theme “Creating a Beautiful Life” where we provided knowledge-building activities on savings and investments to the public.  Similarly, the “SEC Open Space” booth at the SET in the City 2015 event was a chance to inspire people regarding Life Path, personal financial planning, and savings to achieve personal goals.


Fraud Supervision and Regulatory Enforcement


 An efficient, transparent, and fair capital market require its participants to show responsibility and integrity, providing services of high quality and in compliance with rules and regulations.  Supervision and regulatory enforcement must be firm and wrongdoing prosecuted promptly with penalties to match.  The SEC has strengthened relevant operations and regulations, including strict pursuit of fraudulent cases and enforcement of the law.

Revisions to Work Procedures and Regulations
o   Tightening of share issuance through Private Placement (PP) by listed companies to prevent unfair treatment and damage to existing shareholders.  While fully aware the tightening of procedures might add costs to listed companies, it was balanced by extra investor protection.
o   Tightening of the qualifications of non-listed companies seeking to issue a Public Offering (PO).  We are additionally requiring that such companies have no prior record of serious misconduct within the last five years, before seeking approval for the securities issue.  The company must also have no prior record of having a PO application rejected for reasons of serious misconduct.  This prevents such companies from ever accessing capital from the public at large.
o   Improvement of complaint handling and case management via new approach and greater effectiveness of operations.  IT systems are also being upgraded to improve case management services.
o   Comprehensive analysis of processes in the capital market which are susceptible to fraudulent activities.  Scrutiny covered securities registration all the way to regulatory enforcement, identifying ways to prevent wrongdoing that could surface in the future.  The Stock Exchange of Thailand and Association of Thai Securities Companies were also consulted before eventual review by the SEC Board for subsequent inclusion in the 3-year Strategic Plan.
o   Pressed for the revision of the Securities and Exchange Act to improve regulatory enforcement and meet IOSCO standards by inclusion of civil law to bolster criminal codes in use.  The draft is currently under review by the Council of State and the SEC is making preparations to accommodate use of aforementioned civil law provisions.
o   The application of Dispute Rules within ASEAN as best practice or guidance for cross-border cases involving financial products.
Dealing with Misconduct and Transaction Monitoring
o   Investigation of unfair securities trading practices.   This included market manipulation, false news, and insider trading amounting to a total of 70 cases involving fraud and wrongdoing committed by executives of listed companies or issuers of securities and another 14 cases of misconduct regarding accounting or reporting.  Another 15 cases involved operating securities or derivatives businesses without a license.  Other types of misconduct amounted to another three cases.  In total, there were 102 cases in 2015.
o   Quality inspection accounting firms to improve their auditing processes.  Through in-depth analysis to identify loopholes, remedies were derived accordingly including subsequent checks to the solution’s effectiveness in actual application.  This ensures financial reports endorsed by these accounting firms are trustworthy, on par with international standards.   It is imperative that financial reports are of high quality as this affects confidence in the Thai capital market, from both domestic and foreign investors.  Latest rounds of inspections in 2015 showed positive progress by accounting firms, revealing their genuine commitment at improving operations.
o   Inspection of information and transactions by listed companies to prevent unfair practices or fraudulent transfers of benefits.  Strengthening of quality of disclosure by listed companies to ensure disclosure reports are comprehensive, clear, and adequate.  (1) Inspection of financial reports subsequently resulted in five companies being forced to revise their financial statements and inform the public, (2) inspection of form 56-1, (3) inspection of connected transactions or acquisition of major assets being proposed to shareholders totaling 52 transactions with a combined value of 164,690 million Baht and warning issued to investors on six transactions totaling 33,940 million Baht.
o   Inspection of securities companies on three fronts
I. Routine inspection:   Focus on securities companies’ operating procedures and actual performance of duties, especially in areas that could cause damage to investors or overall operations.  Important spots examined included Know-Your-Customer / Customer Due Diligence (KYC/CDD), supervision of investment advisors, safekeeping of clients’ assets, etc.  Firms typically targeted for onsite inspection were those highlighted by the Risk Based Approach (RBA) assessment, those receiving unusual complaints, and firms with large numbers of customers exhibiting potentially inappropriate trading practices.   Inspection results showed securities companies were within acceptable levels of risk; deficiencies were mostly KYC/CDD matters.
II. Theme inspection:  Such inspections covered (1) supervision of securities trading of securities companies.  With past market conditions being relatively volatile, small cap stocks were very active and trading tended to be speculative.  Furthermore, some investors exhibited potentially inappropriate trading practices.  The SEC inspected securities companies’ effectiveness at supervising their clients’ trading practices and found that most brokers have established policies regarding this matter as prescribed by the authorities.  They did focus and monitor their clients’ trades.  Strictness varied from firm to firm, depending on the nature of each’s clientele.   (2) Assessed program trading and determine whether brokers have sufficient controls to gauge potential adverse impact on the whole market, if any.  We examined broker's operating procedures and how program trading was carried out, particularly for brokers with large program trading volume.  Results of the assessment revealed that a reasonable amount of supervision was in place.  For example, brokers' program trading activities comply with SET guidelines regarding the sending of orders, where orders are filtered to detect irregularities before executed into the SET's system.  There were also capabilities to intervene or halt the program if there is fear the program trading will affect the market. 
III. Cause inspection:  A case surrounding the death of a prominent businessman connected to a large share transfer to another individual involved two securities companies were promptly investigated.  Results indicated one company failed to perform its duties properly in three major areas, namely KYC/CDD matters, sufficiently guard clients’ assets, and the proliferation of inside information and conflict of interests.  We filed charges against this company, its management, and investment advisors were implicated.
o    Inspection of asset management companies and associated businesses.  Usual routine inspections were carried out on a Risk Based Approach.  Most asset management companies audited in 2015 complied with regulations.
Regulatory Enforcement

o   Filed criminal complaints against 77 persons for violation of the Securities and Exchange Act: eight persons for operating an unlicensed securities business, six persons for unfair securities trading activities, one takeover case, 38 persons related to securities issuance (i.e. failure to prepare proper documentation or submit information within deadlines), 23 persons for fraud or failure to exercise duty of care expected of company directors, plus a person in a miscellaneous case.  In addition, there were four persons charged for violating the Derivatives Act.


o   Fined from violations of the Securities and Exchange Act:  89 persons, total fine of 91,441,038.06 Baht:  Securities business:  six persons, 2,454,600 Baht.  Asset management business:  eight persons, total fine 2,543,100 Baht.  Unfair securities trading activities:  23 persons, total fine 72,448,538.06 Baht.  Takeover:  four persons, total fine 2,258,00 Baht.  Securities issuance (i.e. failure to prepare proper documentation or submit information within deadlines):  48 persons, total fine 11,736,000 Baht.

o   Administration sanction against management:  48 offenders.  Charges were filed against 41 investment consultants / investment analysts, four securities company executives / authorized persons, one financial advisor, and two financial advisor supervisors.  Breakdown of measures taken consisted of 44 suspensions and four licenses terminations.
Last updated on 27 April 2016
The Securities and Exchange Commission, Thailand
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