Thai SEC defends itself over market oversight amid criticism

 

The Securities and Exchange Commission (SEC) of Thailand has defended its operational efficiency whilst announcing new measures to strengthen market oversight, following criticism from former Prime Minister Thaksin Shinawatra over alleged delays in the work processes of both the SEC and the Stock Exchange of Thailand (SET).

 

Anek Yooyuen, deputy secretary-general of the SEC, rejected claims of sluggish operations during Wednesday's monthly press conference, stating that "the current process is not slow and relatively faster than in the past". 

 

He emphasised that the SEC maintains an open stance towards feedback and continuously refines its procedures.

 

The SEC has demonstrated its commitment to market development through the implementation of 73 projects and measures in 2024, including 12 specific initiatives aimed at building market confidence. 

 

These efforts focus on advancing the digital economy, promoting sustainable capital markets, and enhancing investors' financial well-being through long-term investment strategies, he said.

 

 

 

 

          New regulatory measures

The SET introduced the Uptick Rule on July 1, 2024, alongside improvements to short-selling eligibility criteria for non-SET100 stocks to control price volatility. 

 

The regulatory body has also enhanced supervision of trading programs and strengthened customer identification procedures.

 

Regarding short-selling regulations, Anek explained: "First of all, you must understand that pledging shares can be done. What will the SEC investigate? It must be a case of suspected wrongdoing, but only the Securities Act can do it, and any rule must be comprehensively considered for impact on the majority of people. This is what the SEC is focusing on."

 

 

 

 

          Market experts support stronger regulations

Leading Thai analysts have voiced their support for the SEC's strengthened regulations, viewing them as essential for maintaining market integrity and investor confidence.

 

Niwet Hemwachirawarakorn, a value-based investment expert, told Krunthep Turakij: "Improving the new margin loan criteria is a good and necessary thing. Investors may think that a company was good. But if there is a new criterion that makes investors change their image, they will not invest if there is such a large margin. It is good for investors to get information in making a decision to buy shares."

 

Tiwa Shintadapong, president of the Thai Investors Association, added: "Personally, I don't think there will be much impact because it is only for a short period of time, and it may be good to disclose the list of executives whose shares have been pledged to reduce risks for investors before they decide to invest."

 

Value-oriented investor Anurak Boonsawaeng observed: "Recently, in an IPO [initial public offering] stock, the owner pawned and chased the price of his own stock so that it goes up, making the stock look good. But it will cause negative consequences for investors sticking to that stock."

 

 

          Upcoming reforms

The SEC expects to complete its review of the Uptick Rule by the first quarter of 2025, with potential modifications based on market conditions. 

 

Additionally, new regulations regarding executive share pledging are anticipated to be finalised during the same period, with proposed penalties including fines and imprisonment for non-compliance.

 

The commission has also announced plans to reduce margin loan limits, with the total loan ceiling being lowered from 5 times to 4 times that of a shareholder’s equity. Individual loan ceilings will be reduced from 25% to 20% of equity in the first two years, further decreasing to 15% from the third year onwards.

 

These comprehensive reforms reflect the SEC's commitment to fostering a more transparent and stable market environment, whilst addressing concerns about market manipulation and excessive speculation in Thailand's capital markets.