Detail Content
Regulatory Summary
Securities Business
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Derivatives Business
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1. Securities brokerage
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1. Derivatives brokerage
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2. Securities dealing
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2. Derivatives dealing
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3. Investment advisory service
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3. Derivatives advisory service
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4. Securities underwriting
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4. Derivatives fund management
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5. Mutual fund management
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6. Private fund management
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Paid-Up Registered Capital
The objectives for the determination of minimum paid-up registered capital are to
support businesses of different models;
enhance competitiveness for the intermediaries;
suit respective risk types of different business activities;
lessen unnecessary burdens on the business sector.
Principles for prescription of paid-up registered capital
Business Activities | Paid-up Registered Capital |
Taking obligations and responsibilities in clearing & settlement systems | 100 million baht* |
Maintaining clients' assets in custody | 25 million baht** |
Providing management services of Mutual Fund (MF), Private Fund (PF) Derivative Fund Manager (DF) to general investors | 25 million baht |
Providing management services of Mutual Fund (MF) Private Fund (PF) Derivative Fund Manager (DF) exclusively for institutional investors + not taking custody of clients' assets | 10 million baht. |
Others | 1 million baht.
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*Except agricultural derivatives licenses whose the minimum registered capital remains at the previous level of 50 million baht.
** It should be noted that as Section 96 of the Securities and Exchange Act specifies a minimum paid-up capital of 100 million baht for security company operating securities business in the category of securities dealing or securities underwriting or the securities company keeping clients' asset in custody or investing in or holding securities for investment by the securities company itself, the principle under the Section is still maintained in the notification until the amendment process of the regulatory framework is completed.
In addition to meeting the required minimum paid-up capital, the intermediaries are also subject to maintaining on-going capital requirement (Net Capital) specified by the regulation.
The SEC applies the "net capital rule (NCR)" approach, where securities and derivatives businesses are required to maintain “net capital (NC)” – liquid assets less liabilities and risk haircuts – to ensure that there are sufficient liquid assets to absorb losses, maintain stable financial status and, in the event of insolvency, prevent damage to client assets and the system.
The calculation is as follows:
NCR = Liquid Assets (risk adjusted) - Total Liabilities
General Liagilites + Margin Requirement
In case of shortfall, the operator is required to observe the following:
1. NC or NCR ≤ 1.5 times of minimum requirement (early warning level) that is
1.1 For the case of securities company operating only securities or derivatives business
NCR ≤ 10.5% or NC ≤ 22.5 million baht or
1.2 For the case of securities company holding derivatives broker license
NCR ≤ 10.5% or NC ≤ 37.5 million baht
1.3 For the case of securities company operating securities and/or derivatives business and not having any of the following: (1) hold client assets (2) engage in proprietary investments or (3) bear obligations to the securities clearing and settlement system
NCR ≤ 10.5% or NC ≤ 1.5 million baht | Notifies and files with the SEC daily Net Capital (NC) reports until NC increases to > 1.5 times of minimum requirement for at least 2 consecutive working days.
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2. NC or NCR falls below minimum requirement level;
2.1 For the case of securities company operating only securities or derivatives business
NCR ≤ 7% or NC ≤ 15 million baht or
2.2 For the case of securities company holding derivatives broker license
NCR ≤ 7% or NC ≤ 25 million baht
2.3 For the case of securities company operating securities and/or derivatives business and not having any of the following: (1) hold client assets (2) engage in proprietary investments or (3) bear obligations to the securities clearing and settlement system
NCR ≤ 7% or NC ≤ 1 million baht
| Restricts business operation, and must file a 90-day correction plan with the SEC within 30 days. In case the operator (a) fails to submit such plan (b) fails to operate in accordance with the plan (c) experiences negative NCs for 5 consecutive days, or (d) fails to fulfill its obligations as to clearing and settlements, all operations must be ceased while risks associated with proprietary trading must be reduced, and client positions are to be transferred to other operator(s).
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Audit Committees of Securities Companies
Securities companies with custody services for clients' assets: an audit committee with a minimum of two members is mandatory.
Securities companies without custody services for clients' assets: arrangements for any mechanisms or undertakings in place of the tasks of an audit committee.
Qualifications of Audit Committees of Securities Companies
Report Forms
Note:
* General functions include; for example; risk management, inspection and internal control, compliance, etc.
**Central utility functions include the functions such as support services for investment units dealings and fund management in a fund service platform which is carried out by Thailand Securities Depository Co., Ltd. (TSD); payment system infrastructure services for securities trading in the capital market currently operated by Finnet Innovation Network Co., Ltd.
The outsourcing should be justifiably arranged and not becoming an empty box (without business operations). The intermediaries are required to regularly supervise the service providers to ensure efficiency of the performance (except for group 2 functions).
Applying for Approval and Reporting Guidelines
No prior approval or notification is required except outsourcing the investment management function of mutual funds or provident funds to S/P which is not located in a country where regulatory measures on investment management in that foreign jurisdiction is recognized
by the SEC.
Report the SEC within 15 days from the outsourcing date and when there is any material changes + submit a summary report to the SEC at a least once a year
Appointment of an Investment Advisor (IA) according to Section 100
