The Foundation of the SEC
The capital market has always been a major venue for fund mobilization of
business sectors. Yet, prior to the SEC establishment, market development had
concentrated more on the secondary market where trading of transferable
securities was the main activity than the budding primary market where
businesses issued securities for public offerings. Also a concern at the
initial stage of development was the overlapped market supervision under the
authority of multiple agencies as seen in the following areas:
The Ministry of Finance had the power to regulate securities trading on the Stock
Exchange of Thailand (SET) by issuing regulations or approving those drafted by
the SET Board of Governors, accepting listing and delisting and supervising
securities businesses by approving rules issued by the Bank of Thailand,
issuing and revoking licenses for securities business undertaking. Meanwhile, the Bank of Thailand issued
regulations and supervised business operation of securities companies. The Stock Exchange of Thailand oversaw
members’ operation pursuant to the rules drafted by the Bank of Thailand and
approved by the Minister of Finance.
The Ministry of Commerce was
responsible for registration of prospectus for securities offering of public
limited companies and acted as the registrar under the Public Limited Companies
Act B.E. 2521 (1978). The SET,
meanwhile, oversaw the offering for sale of shares and debentures of limited
companies that were under consideration for becoming listed or authorized
companies as permissible by virtue of the Stock Exchange of Thailand Act B.E.
2517 (1974). Such practice was prevalent at the time as the law governing
public companies was stricter, deterring many companies from becoming ones.
The dispersion of authority and supervision among several agencies and under several laws causes duplication of work, a lack of coherence and continuity. Besides, the highly active market in 1987 drew in short-term speculation that led to unfair market practice amidst inefficient investor protection.
To address the aforesaid issues, the Securities and Exchange Act B.E. 2535 (1992) was promulgated, and the Securities and Exchange Commission was established on 16 May 1992 thereunder as the independent regulator with the centralized roles for supervision and development of both primary and secondary markets. This new structure also facilitated issuance of new financial instruments and put in place effective regulations to ensure fairness and prevent exploitation of stakeholders. As the market became more developed, new products were introduced and three laws were promulgated to support continuing development of instruments and transactions, namely the Derivatives Act B.E. 2546 (2003), the Trust for Transactions in Capital Market B.E. 2550 (2007), the Emergency Decree on Digital Asset Businesses B.E.2561 (2018), respectively.