SET planning to extend short-selling rule
The Stock Exchange of Thailand (SET) aims to extend the temporary measure on short-selling to September 30 from June 30, due to market volatility during the virus pandemic. The move would also extend revised ceiling and floor prices, and the Thailand Futures Exchange (TFEX)’s daily price limit.
SET officials explained that volatility in market had increased after the Covid-19 outbreak, causing volatility in economy. The possible extension will be discussed at a public hearing this week.
“We are currently in the process of accepting comments from relevant parties,” the officials said.
Somchai Kanjanapetcharat, senior managing director at KGI Securities (Thailand,) said that although the extension would mitigate the impact from market volatility, it would also cause difficulties for investors who speculate by shorting stocks.
“Institutional investors have an advantage over individual investors because institutional investors can borrow stocks to make short sales, while individual investors have to make short sales via Single Stock Futures or Derivative Warrants [DWs], causing short sale transactions to drop,” he said.
“Meanwhile, the decline in ceiling and floor prices criteria also reduce investors’ chance to make a profit, causing the trading volume of clients and brokers to drop as well.”
Montree Sornpaisarn, chief executive officer of Maybank Kim Eng Securities (Thailand), advised the SET to permanently adopt the use of short sales criteria which force investors to make short sales only when the stock price is higher than the last trading price.
“After the measure was issued, investors were not taken advantage of by other investors pressuring stock prices and causing damage,” he said.
