Published On: Mon, Aug 9th, 2010

Thai Bourse Allows Wider Usage of Algorithmic Trading

The Stock Exchange of Thailand (SET) is allowing wider usage of algorithmic trading,to be more in line with international trends and to facilitate brokerage firms and investors. In H1/2010, the value of trades done through algorithmic trading more than doubled.

“SET’s policy is now much more open than before for securities companies and investors, particularly institutional investors who trade through member companies’ systems, to transmit trading orders more conveniently and rapidly, including the use of algorithmic trading.Algorithmic trading will facilitate and increase the effectiveness of investment capital management through different trading strategies. It is popular among foreign funds, e.g., pension funds, mutual funds, and institutional investors, who trade through
leading exchanges,”SET Chief Marketing Officer Vichate Tantiwanich revealed.

Mr. Robert Barnes, CEO of UBS MTF (Multilateral Trading Facility) and Managing Director, Equities UBS Investment Bank, United Kingdom, was a keynote speaker at the seminar “Algorithmic Trading: Market Trends and Insights for Asia.” Mr. Barnes noted that the development of foreign brokerage firms’ trading order
transmission, especially in European and American brokerages, has advanced rapidly. These advancements were due to high competition in these markets, which resulted in the improvement of leading exchanges’ rules and technology to fill the needs of brokerage firms and institutional investors.

“In H1/2010, trading value through algorithmic trading accounted for 2.36% of SET total trading value, over 100% rise over 2009, when algorithmic trading accounted for just 0.9% of all trades (by value). However, the share of algorithmic trading is still lower than in developed exchanges, where the figure is over 20%. Nevertheless, we expect that algorithmic trading will receive greater attention in the near future, since SET has improved market access, e.g., by improving order transmission to support brokerage firms having high trading value, or linking trading systems using the FIX protocol, which is in line with international standards that will facilitate trading orders of institutional investors through direct market access. These services will help support securities trading using algorithmic trading to be more efficient,” concluded Mr. Vichate.

In terms of trading surveillance, the SET has amended its rules to be further in accordance with international standards to support further growth.

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