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Market Development
The direction and role of SEC for capital market development
Prospect of Significant Changes

In order to have Thai capital market keep up with an ever-changing global capital market, the SEC has taken into consideration the global changing trend by analyzing and developing a policy that has an implication to the Thai capital market as follows:
1. Growth of Developing Countries in Asia
It is expected that in the next two decades about half of the gross domestic product (GDP) of the world will come from developing countries in Asia, especially those that has the highest economic growth rate in which China and India will be two keys driver and the main factor will come from domestic demand and regional trade that keeping expanding as a result of growing middle class in Asia which has purchasing power and demand for products and services as well as various saving and investment tools. However, as the world is entering aging society, but developing countries in Asia still have advantage on working-age populationit is expected that in 2030 more than half of the world’s working-age population will live in developing countries in Asia.  
Implication of the Policy

Capital markets in developing countries in Asia has a strong potential for economic growth following the influx of capital from foreign countries and domestic demand, creating opportunity for the capital market to serve various demands via products and services such as infrastructure financing, financial products for the middle class, investment channels among developing countries as well as Yuan currency denominated instruments, etc.  

2.  Environmental problems, natural disaster, food and energy shortages
Global warming and shortages of resources will be worsen while changes in ecological system and natural disasters will impact economic, social and environment in a broader scale, therefore, severe flooding that affected Thailand this past years, food shortages, which is the agricultural products, will cause high volatility in food prices in the future.

Implication of the Policy
Impacts caused environmental problems and natural disasters prompted the country to seek fund raising tools in order to reduce burden of the government in procuring infrastructure to prevent natural disaster and to rehabilitate the damage that exists. At the same time. Energy shortage problem causes the country to accelerate alternative energy development and enhance efficient use of energy in order to reduce future impacts. This will open up opportunities for a group of alternative energy business and technologies that enhance efficient use of energy. The food security problems will pave the way for cross-border investment in the agricultural sector among the countries that have sources of capital and those countries that have resources as well as developing risk management tool from volatile commodity prices (commodity).

3.  Interconnectedness of the Global Financial Markets    
Global financial markets have strong tendency to be interconnectedness, both in the form of economic integration of the countries within the same region and in the form of linking domestic capital market and across the region as a result of the demand of institutional investors that seek to invest in investment channel which emphasize quick, efficient trading, low start-up costs and technological development that makes the linkage for financial and investment to be more convenient including the relaxation of capital movement rules and cross-border investment to support competition. However, an increase level of linkage will bring about risks to the system which causes the problem in one market to send impact to another market very easily and quickly as reflected in the past financial crisis.

Implication of the Policy
Supervisors must place a great emphasis on promoting competition and facilitates private sector with competition, and at the same time, should consider supervising financial system to have credibility, capable of supporting high volatility in which there shall be a guideline for solving these problems in the macro prudential policy including carefully avoiding gaps in supervision while establishing cooperation among regulatory agencies.

4.  Entering into Aging Society
It is expected that in the next 20 years the elderly population will continue to increase and resulted in large numbers of elderly people relative to the workforce population which may lead to social and fiscal burden to the government. 
At the same time, the amount of savings globally will be higher and will continue to flow into various investment sources.

Implication of the Policy 
Capital market must have a role in as a source of investment that create long-term returns to those who are in the working age at present in order to support their retirement in the future and to promote products that meet the demand of those who have savings such as products that protect the principal (capital protection) as well as mutual funds with alternative choices. In addition, basic financial knowledge must be strengthen in order for the public to recognize the need of saving and investment as well as appropriate investment channels that best matches their needs.

The SEC has considered the changing trends of the world, opportunities and risks of the Thai capital market as well as recognizes international principles of the International Organization of Securities Commissions (IOSCO), which has an objective of the securities supervisory rules that intends to protect the investors, enabling the stock exchange to embrace fairness, efficiency, transparency and risk reduction within the system including the principles concerning supervisory agency that play role in providing knowledge to the investors, the SEC has implemented supervisory guidelines for creating a balance in the area of encouraging and enhancing capacity to compete in the Thai capital market. At the same time it must maintain a strict and fair treatment.
Last updated on 18 October 2012
The Securities and Exchange Commission, Thailand
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