SEC is seeking public comments on proposed amendments to regulations regarding securities trading services. The proposed changes aim to enhance oversight and ensure compliance with regulations for foreign investors trading through Thai securities companies.
The Securities and Exchange Commission (SEC) is seeking public comments on proposed principles and draft amendments to the regulations related to provision of securities trading services and the sale of securities where the securities company does not possess the securities. The proposed amendments aim to enhance the oversight of securities trading services, maintain fair practices and clarify service provision of securities companies.
Currently, a significant volume of securities trading on the Stock Exchange of Thailand (SET) involves foreign investors, with most orders executed through foreign securities companies to Thai securities companies. In receiving these orders, Thai securities companies may not have complete information on the clients of the foreign securities companies and their trading behaviors. Therefore, it is essential to establish regulations ensuring that Thai securities companies, under the supervision of the SEC, implement stringent processes and systems for screening and monitoring. This will ensure that foreign securities companies, as clients of Thai securities companies, comply appropriately with the regulations related to short selling and long selling transactions*.
The Capital Market Supervisory Board has approved in principle the proposed amendments to the regulations related to the provision of securities trading services and the sale of securities where the securities company does not have the securities in its possession. The SEC is therefore conducting this public hearing to gather feedback from stakeholders. The key points of the proposed amendments are as follows:
(1) To require securities companies with clients who are securities companies under foreign law and acting as brokers or agents in trading or exchange of securities for others (inter-brokers) to additionally conduct a Know-Your-Process (KYP) due diligence. This is to ensure that clients who are foreign securities companies acknowledge and understand the relevant regulations and effectively communicate these regulations to their own clients. It also aims to ensure that the clients have work systems in place to control and monitor compliance with the relevant regulations; (2) To require that securities companies put in place efficient work systems for monitoring and inspecting securities trading transactions of clients;
(3) To require that securities companies enter into an agreement with their clients before commencing service provision, ensuring that the clients agree to pay a fine if the securities companies are penalized by the SET or the clearing house due to the clients’ failure to comply with regulations related to short selling transactions. The securities companies would also have the duty to ensure compliance with the agreement;
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