Initial capital investment requirement for gold traders to be increased
The Commerce Ministry plans to increase the requirement for initial capital investment by gold traders to ensure they can manage the risks due to volatility in the global price of the metal.
The ministry found that gold traders could set up business easily by investing as little as Bt1 million as initial capital, while trade volumes could be 10 times that.
Deputy Commerce Minister Yanyong Phuangrach said some players could trade more than Bt100 million worth of gold a day, but the current low requirement for initial capital investment was out of sync with trading values that high.
"The new rule is aimed at protecting consumers from being cheated by gold traders as well as ensuring that traders have adequate finances to manage their risks amid fluctuations in the price of gold in the world market," he said.
In addition, the ministry in cooperation with the Bank of Thailand and the Gold Traders Association will continue to list all gold traders in the business registration system to prevent cheating and to allow the authorities to control trading fairly.
He explained that although the value of Thailand’s gold import was about Bt300 billion per year, the total gold-transaction value was about Bt1 trillion. Thus gold transactions should be controlled to prevent cheating and price speculation.
According to the Business Development Department, 1,866 gold traders have registered with it. Many of them have registered initial investment capital of only Bt1 million, while trading value reached Bt100 million.
At present, there are about 7,500 gold shops across the country, but only 900 are registered with the Gold Traders Association. Some have also embarked on online trading.
The department also found that some foreigners had employed Thai nominees for trading gold in the Kingdom.
Yanyong said stringent rules for gold transaction should be enforced so that consumers and the gold market are protected under the law, avoiding such problems as recently seen in India and Malaysia.
Speculative demand in India has pressured its currency, the rupee. India imported 860 tonnes of gold in 2012 to meet demand. India has the world’s third-largest current-account deficit, driven in large part by appetite for gold imports in the world’s biggest consumer of the metal.
The government has asked Indian citizens to forgo temptation and help rein in imports that hurt the currency.
