SET’s strategic plan to help bourse cope with digital disruptions
The SET is studying new products that are linked with digital assets, such as DR based on digital coins [tokens], investment instruments in the form of tokens, or the development of e-wallets to keep money that investors use to trade digital coins, etc,
Kingploy Nathomtong
The Stock Exchange of Thailand (SET) has unveiled a three-year framework under the theme “Redefine Thai Capital Market Resilience”, with the objective of maintaining its role as Thailand’s key fund-raising source and protecting the interests of stakeholders.
Efficiency, competitiveness and reliability are designated as key factors of every action plan to deal with digital disruptions.
As Covid-19 accelerated the digital transformation, the digital world is playing a significant role in the daily lives of the people. Digitalisation has become the new normal for all industries, including the monetary and financial markets. The SET, as Thailand’s key fund-raising source with THB18.5 trillion market capitalisation, has seen an increasing need to adjust its strategies to match the digitalised global monetary market, as the only way to minimise the effects of digital disruptions.
In an interview on the occasion of the 50th year of the The Nation, Dr Pakorn Peetathawatchai, president of the Stock Exchange of Thailand, said the SET is an organisation that acts as an intermediary in the capital market. Previous managements have laid a strong foundation for the capital market structure, but there are new challenges rising from rapidly changing technologies, he said.
New technologies provide “players” in the industry with a variety of options, especially bypassing an intermediary to do their own direct transactions. Therefore, if the SET does not want to lose its significant role as a key intermediary, it is necessary to focus on competitiveness and reliability in every action plan of the new framework, he said.
“Being an intermediary amidst rapid change, the SET has to be extremely effective and reliable to gain everyone’s trust, which will help attract them towards us,” Pakorn explained.
Another important role of the SET is working closely with other market players -- securities companies, asset management companies, custodian banks, or settlement banks, through “partnership schemes”, with the aim of jointly developing the capital market, he said. “Now, market players can do business together and support one another, while there was less cooperation among players in the past,” Pakorn said.
Of late, the SET has been focusing on how to cater to the exact needs of all stakeholders, with an aim to make them perceive the SET as an important and potential partner to work with, he said.
The three-year strategy (2021-23) under the theme “Redefine Thai Capital Market Resilience” has been designed with this notion in mind.
“As far as product development is concerned, the SET has expanded lines of new products to have more variety and comprehensive coverage. In the past, investment products were concentrated in the group of ‘Big Cap’ stocks. Currently,
many more products have come from mid-cap and small-cap stocks.”
“In addition, there are new products that enable investors to better diversify their risks through investing in foreign markets, such as Depository Receipt [DR] and Derivative Warrants,” he said.
“It is expected that in 2021, investors will see the first DR, representing shares of foreign public companies, especially stocks that investors are highly interested in, such as Apple Inc, Amazon.com, Alibaba Group etc.
“Moreover, the current digital transformation provides investors with access to all kinds of investment products at lower costs,” he said.
“As a result, the SET needs to accelerate the development of new investment products that meet the needs of new investors. Of late, the SET is in the process of developing investment products that can be traded as fractional products, which are suitable for investors with low capital who want to directly invest in stocks without going through mutual funds,” Pakorn said.
For example, the current cost of investment in Siam Cement Public Company (SCC)’s shares requires a minimum investment of Bt10,000.
This can be broken down to much cheaper investment units through the issuance of DR representing SCC’s shares. This kind of product issuance is similar to investing in digital assets of cryptocurrency where investors can buy a fraction of an asset at a fraction of its total value, he noted.
When asked about the current investment situation in digital assets, Pakorn said that there was a chance that the new model of investment could replace the existing investment model provided by the SET when the ecosystem of funding is ready and more reliable.
“However, it is likely that both new and existing forms of the capital market would continue to develop in parallel for another 5-10 years, or until investors have no concerns about safety and legal issues for investing in digital assets,” he said. “If there is readiness on these issues, it is believed that a new form of equity market would grow rapidly.”
“The SET is studying new products that are linked with digital assets, such as DR based on digital coins [tokens], investment instruments in the form of tokens, or the development of e-wallets to keep money that investors use to trade digital coins, etc,” he added.
