1.   Global trend and implication

        (1) Global financial market instability
 
              The recent global financial crisis including the US subprime and the EU public debt debacle reflected the great uncertainty in the market. In addition, the increased interconnectedness of cross-border capital market also poses greater contagion risks. Therefore, it is essential, in designing the development policy, to ascertain the credibility and resiliency of financial system.

         (2) High economic growth of emerging Asia

               The soaring economic growth of emerging Asia is a result of the expansion of domestic consumption and the intra-regional trade, resulting from the increase of the emerging middle class with potential purchasing powers and high demand, accompanied with rising foreign direct investment. In parallel with their economic growth, the capital markets including both stock and debt market have also grown exponentially. This will be an opportunity for Thai capital market to serve the variety of increasing needs such as infrastructure financing and demand for  higher investment return.

          (3) Interconnectedness of economic and financial system        

                Advanced technology and liberalization of cross-border investment and capital movement enable investors to move their investment much more easily to markets that offer higher return. There are rising demands from institution investors for prompt, effective, and low-cost investments. The world’s financial market is likely to become more interconnected as a consequence of economic integration within and between regions to strengthen their competitiveness. Thus, it is important to enhance capability of domestic players and to promote competition in order to benefit from wider opportunity in the global market.

          (4) Environmental problems and resource scarcity

               Global warming and resource scarcity are likely to become more common and more severe. The changing ecology and natural disasters will produce strong impacts in many aspects, namely the economy, the society, and the environment. Furthermore, the scarcity of agricultural products coupled with growing demand from increased middle class population will create fluctuations in food prices in the future, which will create the need for financial tools to manage risk of price fluctuations. 

          

           (5) The Aging Society
             
                 The number of retired-age population will continue to increase, resulting in the higher dependency ratio which could lead to social problem and fiscal burden to the governments. So capital market should provide long term investment tools with appropriate yield for population in working age to be able to afford the living expenses after their retirement. There should also be more diversity of financial products to satisfy saver’s needs, such as a broader range of asset classes for mutual funds. Furthermore, the country should promote financial literacy and educate its citizen to realize the importance and necessity of savings and investment as well as the available options of investments that will best suit their needs especially in the long-term future.

 

           (6) Inequality problem

                 In the past 30 years, the problem of inequality have spread in a higher degree all over the world, both within the same country and across different countries. As a result, the economic development policy in the next decades will put more importance on the inclusive growth to distribute wealth through all level of populations in order to narrow down the inequality gap. In the long term, the policy should also promote the sustainable growth in order to increase domestic demand. The success of these policies requires the financial inclusion measures, that will enable the potential businesses and general public to get access to the required funding and the investment return.

(7) The emergence and growth of FinTech

             FinTech is a global phenomenon of disruptive technology. It enhances the efficiency of financial services and transforms the industry landscape to a new level by allowing service providers to apply innovative technologies to create a diverse range of client-centric products and services. FinTech also enables potential clients and underserved segments of the economy to access financial services at affordable prices. FinTech could offer higher efficiency and convenience in the capital market. However, it should be noted that such disruptive innovation could also impose a higher risk of cyber security.

(8) The increasing role of capital market as a fundraising portal for SMEs and strategic sectors 

              Financial inclusion is a major concern in countries around the world. Securities regulators are expanding their roles and scopes of work to enhance capital access for small and medium-sized enterprises (SMEs) and strategic sectors. In moving toward such goal, however, regulators are facing the big challenge of making fund mobilization more convenient and cost-effective while maintaining appropriate investor protection.

2. The objective of capital market development

Corresponding to the global trends, objectives of capital market development are to drive the sustainable economic growth, distribute wealth, and prepare the country for entering the aging society, together with boosting domestic competitiveness and providing effective link between real sector and financial sector.

However, the current situation points out that there are still some limitations regarding access to capital market for general public and the real sector. In addition, the local market lacks the variety of financial products and services while the financial intermediaries are not readily equipped to grow their business internationally. Hence, the role of capital market should be strengthened to respond to needs of all those stakeholders. For real sector, the capital market should provide sources of fund at competitive costs for business to grow. For general public, there need to be a variety of financial products and services corresponding to investment demand especially for long term saving need.

At the same time, the supportive ecosystem should be prepared, including the proper legal infrastructure, the neutral, transparency and competitive tax regime, the accommodating capital movement policy, and the competent market players. Furthermore, the investors should be equipped and empowered with knowledge to be able to protect themselves. Last but not least, the regulators should be prudent but proactive .

3.  SEC’s role for the capital market development

     (1) Maintaining market integrity and investor protection

           The important task of maintaining market integrity and protecting investors include the quality control of market players that will result in transparency and proper disclosure of  information through overseeing corporate governance of issuing companies, and the service quality provided by financial advisors and auditors. SEC also supervises the market and intermediaries for fair trading activities, inspects disclosure of issuing companies, and ensures an effective enforcement system. Apart from ensuring that these rules and regulations are on par with international standards, SEC will also build a mechanism of self and market disciplines to complement the regulatory discipline.

      (2) Ensuring Stability of Financial system

            In terms of market resiliency, it is crucial to ensure that the financial system could withstand the market volatility and that the turbulences, if arise, could be resolved and contained .  In line with this, SEC has strengthened efficiency in monitoring financial position, business operation, and risk factors of market participants including clearing house and stock exchange, with the purpose to identify key risk indicators and mitigate them effectively. 

       (3)  Promoting competitiveness in Thai capital market

              In order to widen the range of product diversity and fundraising tools, SEC has adopted new regulations regarding the infrastructure fund, and the Real Estate Investment Trust (REIT). SEC has also revised regulations to facilitate public offerings of newly issued shares of a holding company. In the next phase, the SEC will implement more relaxed and flexible regulations for securities issuance to promote innovation of products and services with degree and speed that would allow for proper risk management to the system.

             Regarding the international scope, SEC will play more proactive role to enhance Thai capital market’s capacity to capture benefit from emerging Asia growth, particularly from Greater Mekong Subregion (GMS). Recently, major economies, both in and outside the region, are paying attention to GMS and considered it as one of strategic locations for their economic development policies. Thailand, as a member of the GMS, has great advantages in terms of location, cultural proximity and well-developed infrastructures in real sector and financial system that can enhance mutual benefit to Thailand and neighboring countries. Hence, the GMS should be concretely included in Thailand’s capital market development strategies so that Thailand can become a significant connector between developing countries in Asia especially the GMS members and the rest of the world so that we would benefit from the growth of the region  as well as  from the world’s capital market development.

       (4)  Promoting Access to capital market

              For the purpose of promoting accessible capital market, it is important for SEC to reach out to all stakeholders so that Thailand capital market will be fully utilized in enhancing their growth. In terms of issuers, the SEC has already initiated projects to facilitate fundraising for all types of businesses; namely, “Pride of Province” and “SMEs Bond” aiming at businesses in countryside and SMEs. SMEs have been the backbone of Thai economy, and they need access to capital to expand their business to get ready for regional and international linkages. So in the next phase, SEC will aim to develop more fundraising channels for SMEs and other targeted groups of entrepreneurs. In doing this, SEC will emphasize on providing knowledge and guidelines on preparation for successful fundraising and initiating activities to foster networks among SMEs, financial advisors and potential investors.

               
              With regards to the general public, the SEC has highlighted the essence of financial literacy and, in the past year, has proceeded on promoting comprehensive investor education materials through various channels, and developing “start-to-invest” mobile application. Currently, despite the increasing number of Thai investors in Thai capital market, there still lacks suitable investment advisory services which results in high concentration of investment in deposit-like products. This would impede the investors’ risk diversification and reduce the chance of getting higher return.  As a result, SEC will significantly promote asset allocation concept and investment products that serve investors’ investment goal and risk appetite while sustaining their long-term savings. To implement this, SEC will carry out various measures regarding widening the distribution channels of securities firms (both standalone and bank affiliates), improving quality of financial advisors, promoting investor education, and facilitating the creation of products that are suitable for new investors.

• SEC Strategic plan 2015