Published On: Sun, Feb 9th, 2014

Thailand Futures Exchange Improves SET50 Futures Contract Size in May

Kesara Manchusree TFEX Managing Director

Kesara Manchusree TFEX Managing Director

The Thailand Futures Exchange PCL (TFEX), under The Stock Exchange of Thailand (SET) group, announced that it will modify its SET50 futures contract to have a smaller contract size on May 6, 2014. The new size of SET50 futures will increase liquidity to the product and reduce the capital outlay, enabling more investors to participate.

TFEX is continually improving its products to better serve investor needs, TFEX Managing Director Kesara Manchusree said. Since TFEX started trading SET50
futures in April 2006, SET50 Index had been at its lowest at around 300 points.

The Index has dramatically increased over time, reaching its highest point last year at 1,092.27, so the SET50 futures notional value increases more than 3 times.

Also, SET50 Index fluctuation means that investors need to deposit higher margins in order to trade. The new SET50 futures, or mini-SET50 futures, will have a contract size that is one-fifth that of the existing product. The contract multiplier will be reduced from THB 1,000 per index point to THB 200 per index point, resulting in a drop in size to about THB 200,000. Initial margins and exchange fees will be reduced by the same proportion”, Kesara added.

TFEX, Thai Clearing House, and TFEX members are preparing to launch mini-SET50 futures on the same day as the launch of new derivatives trading system.

Derivatives markets in United States and Asia, eg. India, Hong Kong, Singapore and Taiwan, also reduce their contract sizes when their indices double, normally
to one-fifth, but in some markets, contracts were reduced to half or one-tenth of their former size. Mini-SET50 futures will also become the same size as SET50
options. Therefore, investors can develop strategies using SET50 futures and options, together with other products based on SET50 Index components as their
underlying assets more easily.

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