Secondary Markets / Securities Registrar
Secondary markets or markets for trading of securities and derivatives mean acting as a market or trading center, which in brief means a place where investors can trade securities or derivatives. Any persons who wish to operate a business as a secondary market must apply for a license from the Securities and Exchange Commission (SEC Board). And after having been granted the license, they must comply with the relevant rules for business operations.
The Stock Exchange of Thailand (SET) is a secondary market with special characteristics because it was established as a juristic person by law in 1975 prior to the establishment of the SEC. The objective of SET is to operate stock exchange business, having powers to issue various rules and regulations. The Securities and Exchange Act B.E. 2535 specifies that SET is an organization under the supervision of the SEC.
The SET's Board of Directors (SET Board) consists of not more than five persons appointed by the SEC and not more than five persons elected by members of the SET to reflect on the involvement of capital market stakeholders. The SET Board must appoint one person as the SET Manager to manage the SET's operations and will be a director, ex officio.
The SEC supervises SET which covers the following three areas:
The conduct of other businesses must be approved by the SEC Board.
Issuance of rules and regulations for the oversight of activities within SET, for instance, rules on the listing and delisting of listed securities, rules on disclosure of information, rules relating to members, and rules for the trading, clearing and settlement of securities must be approved by the SEC Board.
In the case where there are adverse effects to the public or the economy, the SEC Board has the powers to instruct the SET to issue or amend its rules, or to act or omit to act, with a view to preventing damages.
Securities Trading Center is another type of secondary market. Any company wishing to establish and provide service as a securities trading center must apply for a license from the SEC Board. The application must be jointly made by not less than 15 securities companies. The securities trading center will be a juristic person and has a board of directors consisting of not more than nine directors elected by the founding members. The regulations for and the supervision of securities trading center are comparable to those for stock exchange.
Derivatives Exchange is a market to facilitate the trading of derivatives. Any persons who wish to become a derivatives exchange must be a public company limited, have been granted a license from the SEC Board, and at least two-fifths of the total number of directors must be persons who can perform duties to look after the benefits of members, investors and stakeholders. In addition, licensed derivatives exchanges must comply with the regulations of the SEC, such as complying with the rules on business operations and receives approval of its rules and the form and terms of the derivatives contract specification, etc.
An important part of trading in securities and derivatives is to ensure that both counterparties will carry out their agreed trading agreement. Therefore, it is necessary to have a clearing and settlement system whereby a clearing house acts as a Central Centerparty (CCP) for the buyer and the seller, and will guarantee clearing and settlement in all trading transactions which have occured. If one of the counterparties does not perform in accordance with the agreement, the clearing house will be responsible. Therefore, clearing houses must have appropriate risk management measures in order to effectively perform the duties of guaranteeing clearing and settlement.
- Securities Depository Center
At present, most securities are in scripless form, with a securities depository center acting as a depository of securities in its system, by performing the duties of:
- Deposit and withdraw of securities;
- Transfer of securities;
- Pledging and revocation of pledging of securities.
The supervision of clearing house and securities depository center in accordance to the oversight framework for the supervision of financial market infrastructure are performed from the granting of licenses, issuing regulations for the business operations which are different from those of securities and derivatives businesses. For clearing houses and securities depository centers, the supervision will emphasize on the mechanisms to protect the assets of their members and cclients as well as the issuance of their rules must be approved by the SEC Board.
Provides service in preparing and maintaining the register book of securities holders, transfer of securities ownership, pledge and seize, as well as the closing of the book in order to have information on securities holders, deal with rights and benefits arising from securities such as payment of dividends and interests, delivery of information such as annual reports or any other documents, which the securities issuers need to inform the securities holders.
Stock exchange /
Securities depository center
Related Rules and Regulations
Securities Trading Center
Securities Clearing House
Derivatives Clearing Houses
Securities Depository Centers