The Stock Exchange of Thailand recognizes the crucial role investor protection plays in enhancing investor confidence and contributing to market growth. Such protection is best understood as a combination of different but closely integrated measures — including, but not limited to, market regulation & enforcement, oversight of securities companies and listed companies, reliable trading and settlement systems, and transparent and equitable information disclosure. Consequently, SET has established the Securities Investor Protection Fund (SIPF) in cooperation with brokers who have voluntarily joined the fund. The fund’s purpose is to create confidence among SET investors who trade securities through SIPF-member brokers by protecting their investments; investors trading through SIPF members can receive compensation from the fund in certain circumstances as defined under SIPF regulations.
Market Rules & Regulations
Market players, including member companies, stockbrokers, custodians, and listed companies, must strictly follow all relevant rules and regulations. While both the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) play important roles in regulatory enforcement involving brokerage firms, investors are advised to take the first step in their own protection by ensuring that they deal only with securities companies licensed by the Ministry of Finance upon the recommendation of the SEC. Investors are also encouraged to closely monitor their own trading activities and to report any suspected misconduct to—or file a formal complaint with—the SET, the SEC, or the Economic Crime Division of the Royal Thai Police.
Reliable Electronic Trading Systems
The SET has operated fully computerized trading since 1991, allowing for expanded trading capacity as well as improved efficiency and transparency. The more-recently upgraded ARMS trading system has the capacity to handle 600,000 orders daily.
Clearing and Settlement
To ensure investor confidence during the entire trading cycle, the reliability of clearing and settlement is of great importance. Clearing and settlement is handled by the Thailand Securities Depository Company Ltd. (TSD), which also handles securities deposits and is Thailand's main share registrar. The SET clearing and settlement cycle of T + 3 is on par with global standards.
Thailand Securities Depository Company Ltd. has also adopted risk management measures to minimize settlement risks for all members. The TSD has undertaken the following measures:
- Adopt the Delivery versus Payment (DvP) model for securities clearing and settlement to reduce risks, build confidence in the market, and to meet recognized international standards.
- Move towards Real Time Depository Registration (RTDR) to enable investors and listed companies to access shareholder information instantly, thereby enhancing trading efficiency and risk management as well as reducing expenses for listed companies.
- Implement a 100% scripless system, which replaces paper securities certificates with electronic entries. The scripless system enhances efficiency in clearing and settlement, improves risk management, increases convenience, and reduces expenses with regard to share certificate issuance. The SET coordinates closely with relevant government agencies in implementation and operation of this system.
- Streamline transactions with the implementation of straight through processing (STP) with the goal of achieving a T+2 settlement timeframe. STP allows for the integration of relevant information with institutional investors and custodial banks, supports the reduction of expenses, and facilitate the investment process for foreign institutional investors.
- TSD has established a clearing fund to provide security against damages caused by any settlement default. Both the Stock Exchange of Thailand and TSD fund members contribute to the fund.
Since 1995, SET has been using Automated Tools for Market Surveillance (ATOMS) computerized system to monitor securities trading. ATOMS consists of three basic systems: a monitoring system that detects and reports irregular trading; a system to retrieve data and determine the cause of trading irregularities; and a reporting and analysis system. ATOMS facilitates the detection of trading malpractices and subsequent investigations, and in so doing protects investors and boosts investor confidence in SET.
SET Information Disclosure
In line with global capital market standards, SET abides by the principle of transparent information disclosure for the benefit and protection of investors. In other words, all pertinent information relating to a company that can influence investment decisions must be made public by a company. Investors can obtain more information by phone at 02 009 9999; on the SET website; or Contact Us.