Following misconduct in the Thai stock market late last year, the Association of Securities Companies agreed to amend six rules to prevent potential fraud in future transactions.
The amendment was made in response to the case of an unusual trading session of More Return Public Company Limited (mai: MORE)’s trading volume on November 10, 2022 that surged more than 3,000% of its average volume, a day prior to the announcement of its third quarter results that recorded nearly seven million baht of loss, compared to a net profit of 22 million baht in the same period of 2021.
The probe linked to several persons and brokers that leverage loopholes in the system to make a trade.
The association believed these following amendments would strengthen the market operations and prevent traders from taking advantage of the system. These amendment include:
1) Better risk assessments are suggested to be done by considering the customer’s total exposure, setting haircut collateral based on their trading behavior as improper trading, Trading Alert/Turnover List as well as based on the quality, and liquidity of each securities.
2) Only foreign investors will be permitted to trade NVDRs and large transactions must be posted on the Big Lot board. Moreover, once abnormal trading is identified, the Thai Stock Market’s opening and closing times will also be modified.
3) Suspending settlement and extending the settlement period will allow for unusual or pending transactions, such as when there is reason to suspect fraud, as well as excluding unusual or pending transactions from regular transactions.
4) Increase the initial margin rate for cash balances while also reviewing the credit guarantee to ensure there is sufficient room in case of fraud.
5) Establish a specific bureau to monitor trading operations, such as a credit limit exposure surveillance, revision of capital requirement and net capital calculation in case of abnormal situations. There will also be a revision of surveillance criteria, including trading alerts turnover list as well as warning list.
6) Brokers will be required to store traders’ digital traces such as IP address, log-in/out detail in a form of unified format and/or machine readable.
