Following a public hearing on the proposal to amend the capital adequacy requirements for business operators to ensure that they have sufficient capital to address business risk and maintain business continuity,* the SEC has issued the following key amendments: 
(1)  Allowing business operators to temporarily use qualified subordinated debt exceeding the shareholders' equity without counting them as total liabilities in the calculation of net capital on the condition that they rectify the excess qualified  subordinated debt so as not to surpass the shareholders’ equity within a specified period. Additionally, the definition of Qualified Subordinated Debt has been revised to include provisions requiring business operators to defer principal payments and cancel or defer interest or any other returns when an event occurs that may impact their net capital, as determined by the SEC. This aims to provide greater flexibility and suitability. A transitional provision allows business operators to continue using qualified subordinated debt as previously defined without exceeding the shareholders' equity, for up to one year for liabilities recognized before the effective date of the new regulations;

(2)  Updating the list of country and main index of the emerging market for the calculation of the position risk** of foreign stocks;

(3)  Revising the definition of Special Liabilities to include other liabilities such as liabilities resulting from delayed payments for securities sale to customers as a result of an official authority’s freezing payments from such sale, as well as debts from having client’s asset custody or acting as a representative of such asset custody for a business operator who engages in other business activities and distinctly segregates its assets from those in its custody. This revised definition will help to mitigate excessive burdens in maintaining net capital.   

The relevant notifications of the amendments*** will come into effect on 16 August 2024 onwards.   

Remarks: 

* The current regulations require business operators to maintain capital of no less than the minimum capital requirement, which includes: (1) maintaining net capital (NC) with liquid assets, after deducting total liabilities and risk charges, of no less than the specified amount, and (2) maintaining a net capital ratio (NCR) where the ratio of NC to general liabilities (total liabilities and financial derivative liabilities, minus special liabilities) plus assets pledged as collateral for derivatives businesses must not fall below the specified ratio.
** Position risk refers to the risk arising from changes in the prices of securities or underlying assets, which may result in potential losses for business operators due to their position taking in securities, financial instruments or financial derivatives, whether in long and/or short position.   
*** (1) Notifications of the Securities and Exchange Commission No. Kor Thor. 15/2567 Re: Capital Maintenance of Business Operators (No. 3), dated 1 August 2024 (https://publish.sec.or.th/nrs/10297s.pdf), (2) Notification of the Office of the Securities and Exchange Commission No. Sor Thor. 19/2567 Re: Calculation and Reporting of the Calculation of Capital Maintenance of Business Operators and Provisions in Case of Failure  to Maintain Capital (No. 3), dated 1 August 2024 (https://publish.sec.or.th/nrs/10298s.pdf), including Report Form for Calculation of Net Capital (https://publish.sec.or.th/nrs/10299p.xls) and Clarification of the Calculation of Net Capital (https://publish.sec.or.th/nrs/10300s.pdf and https://publish.sec.or.th/nrs/10301s.pdf), (3) Notification of the Office of the Securities and Exchange Commission No. Sor Thor. 20/2567 Re: Additional List of Liquid Assets, Special Liabilities and Total Liabilities for the Calculation of Net Capital, dated 1 August 2024 (https://publish.sec.or.th/nrs/10302s.pdf).