Chaipatr Srivisarvacha, CEO, KT ZMICO Securities Company; and Governor, Stock Exchange of Thailand (SET) : Interview

Chaipatr Srivisarvacha, CEO, KT ZMICO Securities Company; and Governor, Stock Exchange of Thailand (SET)

Interview : Chaipatr Srivisarvacha

What are the benefits of implementing the trade date plus two days (T+2) settlement period?

CHAIPATR SRIVISARVACHA: In the first quarter of 2018 the SET implemented the T+2 settlement cycle. With the shorter settlement period, investors are now able to quickly turnover their capital and realise faster returns. This increases flexibility in securities trading as well as subsequent transactions.

In addition, improving the settlement date will, by default, reduce the risks of clearing and settlement of securities transactions in the Thai capital market. The implementation of T+2 has strengthened the SET’s competitive edge and, furthermore, has aligned it with international standards.

As new investment vehicles such as initial coin offerings (ICOs) emerge, how can Thailand prepare for financial technology and crypto-assets?

CHAIPATR: Crypto-assets are a worldwide phenomenon and everyone is jumping on board. However, I believe it is better for Thailand to approach at a steadier pace. Governments all over the world, including ours, have concerns about the rate of growth in this market and are trying to establish proper regulations. It is important to understand that the regulator’s intentions are not necessarily to prohibit crypto-assets, but to protect investors.

On March 27, 2018, the Thai Cabinet approved a royal decree to regulate transactions involving digital assets. The regulatory framework is being finalised by the Securities and Exchange Commission and I think it should be finished within 2018.

In the short term crypto-assets, including ICOs, may become an important source of funding and are likely to be traded in a secondary market. We will need to have a body – a digital exchange – to be fully responsible for regulation, screening conditions, educating investors and so on. Once this has been completed, we should see more ICOs coming in.

How can regulators pave the way for block-chain-based securities trading?

CHAIPATR: Blockchain is starting to become a well-established concept. Today, it can be used for cross-border money transfers or even post-trade settlements, which many exchanges are currently exploring. For Thailand, the SET and the Association of Securities Companies are looking into the potential of uses of blockchain, including securities trading, equities, the Thailand Futures Exchange and even future ICO instruments. As a concept, block-chain sounds very promising; however, we need to make sure that the technology can handle market conditions in terms of capacity for transactions from an active retail base, speed and reliability. Thus, the immediate impact would be more focused on sectors such as banking. For example, we have already seen some banks in Thailand adopting and using block-chain to transfer money between Thailand and Japan.

What kind of role will initial public offerings play in the stock market in 2018?

CHAIPATR: Despite 42 new companies listing on the SET and the Market for Alternative Investment in 2017, there are no more large privatisations in the works in Thailand. The main opportunities for the market are tied to international flows coming from the Cambodia, Laos, Myanmar and Vietnam (CLMV) region, as those governments are looking to raise funds by privatising state assets. Still, there are concerns that the secondary listing regulations in Thailand may not allow us to see as many secondary listings as we would like. For example, there is a lot of interest in investing in Vietnam, a market that grew by 45% in 2017 and was already up by 19% at the end of the first quarter of 2018. That said, depository receipts and derivatives may be better formats for investors willing to invest in the CLMV region, which will be underlined through the Thai stock market.

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The Report: Thailand 2018

Capital Markets chapter from The Report: Thailand 2018

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