Overview

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The Thailand Clearing House Co. Ltd. (TCH), the subsidiary of The Stock Exchange of Thailand (SET), was established on August 9, 2004, with a registered capital of THB 600 million (USD 16.50 million). During 2004-2009, TCH acted as a Clearinghouse or a center for clearing Derivatives traded in Thailand Futures Exchange (TFEX). Through the clearing house integration plan and intention to segregate risk associated with clearinghouse role from depository function, Thailand Securities Depository Co., Ltd. who had acted as clearinghouse for equity and bond since January 1, 1995 has transferred clearing and settlement functions for equity and bond to TCH from 2010 onward. Thus, TCH will become the integrated clearing house for all financial products 

The TCH is governed by the Securities and Exchange Act B.E. 2535 (1992) for equity and bond and the Derivatives Act B.E. 2546 (2003) for derivatives and is under the supervision of the Securities and Exchange Commission (SEC).

 

As a clearinghouse for all securities and derivatives traded on the SET, mai, TBX and TFEX, TCH’s most important role is to serve as the central counterparty to all trading activities on those exchanges. Thus, TCH will guarantee clearing and settlement for a concerned party no matter what any counterparty may break the commitment or not. This is a crucial mechanism to lessen counterparty risks.

Right after a trading transaction is matched and those exchanges have confirmed the matching transactions with their members, the TCH, as the direct central counterparty (CCP), will become a buyer to every selling member and a seller to every buying member. Therefore, a member who has bought or sold the securities has an obligation not to the party on the other side of the transaction, but to the clearinghouse, just as the clearinghouse has an obligation to the member. This is called a novation process. 
 

As a CCP, TCH guarantees the performance of payment and securities delivery of any trading transactions on the SET, mai, TBX and TFEX. This reduces the risks stemming from clearing members who fail to meet their contractual obligations or ‘credit risks’, thereby strengthening the confidence in and by the involved parties as well as preserving the financial integrity of the clearinghouse and the market as a whole. 

However, TCH will guarantee the payment and securities delivery for gross settlement transaction.

The management of TCH is under the supervision of Board of Directors composed of :
 

With our intention to provide the fairness and integrity of clearing system, TCH applies the efficient system interfaced between exchanges, TCH and members, thus all clearing transactions will be controlled and monitored efficiently. Moreover, TCH has established committees to consider the relevant issues before executing the rule. Committee and Sub-committee are as the following :

1. Audit Committee
2. Risk Management Sub-committee
3. Business Conduct Sub-committee
4. Appeal Sub-committee