Published On: Fri, Jul 1st, 2011

Stock Exchange of Thailand To Implement New Ceilings and Floors for Derivative Warrants

The Stock Exchange of Thailand (SET) will implement new ceilings and floors for derivative warrants, warrants and transferable subscription rights from July 5 in order to limit risks, boost trading opportunity and reduce improper orders.

“The amendment will enable investors to narrow risks incurring from price volatility which might be caused by placing improper orders or those placed in error. It will also help increase trading opportunity to investors,” SET President Charamporn Jotikasthira said.

Under the new rule, derivative warrants will use the same ceilings and floors as warrants and transferable subscription rights, which are by no more than 30 percent of the previous closing price of the underlying security multiplied by the exercise ratio.

In addition, on their first day of trading, prices of derivative warrants, warrants, and transferable subscription rights can change from their initial public offering price by no more than 100 percent and no less than 50 percent of the last closing price of the underlying security. Currently, there are no floor or ceiling limitations on first day of trading for these instruments. The Exchange’s order screening system will be extended to monitor unusual trading activities and the ceilings and floors of derivative warrant products.

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