The Stock Exchange of Thailand (SET) is continuously advancing to match the right financial opportunities for businesses and investors, following its 2012 strategic plan by developing post-trade services to provide a full range of services and building a strong infrastructure to cope with expansions.
Two key post-trade services that have been developed recently are third-party clearing (TPC) and global custodian services, to ensure effective post-trade facilities for investors, depository members, and clearing members.
“Building post-trade infrastructure facilities enables us to expand and centralize services effectively, boosting SET’s competitiveness and paving the way to become the center of post-trade services in Southeast Asia. Therefore, SET has extended its TPC execution, allowing clearing members to carry out give up/take up clearing and settlement obligations. Also, SET has mandated global custodians for foreign securities depository services,” said SET Executive Vice President Bordin Unakul.
TPC has been in the Thai market since 2011 to boost the exchange’s competitive positioning and the capabilities of brokers which are members of Thailand Clearing House Co., Ltd.. In the first phase of TPC development, non-clearing members are allowed to outsource clearing functions to clearing members whose business is to provide TPC services. This service has received a particularly warm welcome from members handling gold-based exchange-traded fund (gold ETF) transactions.
The next TPC development, just launched in July, is the give-up/take-up arrangement, enabling non-clearing members to outsource clearing and settlement to more than one clearing member. This will help reduce the risk of clearing and settlement by distributing transactions to more than one party. In addition, investors will reduce costs, as they can centralize clearing and settlement of all of their transactions through only one broker.
For depository services, Thailand Securities Depository Co., Ltd. (TSD), under the SET group, in June mandated global custodians to cover major financial markets in 27 countries worldwide. This start-up effort is to build an extensive global clearing and settlement network, to service depository members holding foreign securities, and to cover new financial services of SET in the future, including dual listings and depository services in foreign currencies. This infrastructure, expected to start operating from 2013, will be another alternative channel to centralize depository service for members in a bid to
lower costs and boost efficiency for members, benefiting Thai investors in the long run.
The above two key developments are part of SET’s Operation Master Plan to develop and improve post-trade service with efficiency and create optimum benefits for businesses, as well as enhance global trust in and recognition of SET operations.
Thailand Securities Depository Co., Ltd. (TSD) and Thailand Clearing House Co., Ltd. (TCH) are under The Stock Exchange of Thailand (SET) group. TSD provides securities depository services using a secure and efficient scripless system, including withdrawal, transfers, pledging, and revocation. It also acts as a
registrar for common and preferred stocks, including preparing and maintaining registry books that contain correct and complete information. TCH acts as the center of clearing and settling of securities traded on SET, bonds traded on the OTC market, and the center of clearing and placing margins of futures traded on Thailand Futures Exchange pcl.