Thailand Clearing House Accepts USD, Euro as Derivative Collateral
The Thailand Clearing House Co., Ltd. (TCH) will allow foreign investors to use US dollars and Euros as collateral — only for derivative transactions – to reduce their foreign exchange risk. This step will not affect the value of the baht, and will attract foreign investors to Thailand’s derivative market. The service will start on November 29.
“The Capital Market Supervisory Board and the Bank of Thailand, as the authorities to control currency exchange rates, gave permission to the TCH to receive foreign currency as collateral. TCH and its members can transfer and be transferee of foreign currencies from non-Thai clients as collateral for derivatives traded on the Thailand Futures Exchange PCL (TFEX), according to the BOT’s regulations. The currency
will not be transferred back into Thai baht,” revealed The Stock Exchange of Thailand(SET) EVP – Post-Trade Services & Development Bordin Unakul.
“TCH received great cooperation from all parties in encouraging the authorities to allow using foreign currencies as collateral. Moreover, TFEX has continual growth rate, while launching new products consistently. We are studying the feasibility of accepting other foreign currencies as collateral, which will help us compete with foreign derivatives markets,” Mr. Bordin said.
Placing foreign currency as collateral will be conducted in the same way as placing Thai baht as collateral, or conducted through electronic systems of settlement banks, i.e., Siam Commercial Bank PCL and Krung Thai Bank PCL, which provided cooperation and support for TCH and its members.
All parties, including TCH members and settlement banks which will be responsible for settling, have tested their systems with TCH and successfully passed.