Thai Stock Exchange Proposes Measures to Restrict Short Selling and Program Trading

The Board of the Stock Exchange of Thailand has approved additional measures to enhance the supervision of short selling and using a computer to send orders or program trading, along with measures for the disclosure of information to the public, as follows:


Measures to supervise short selling

Review of securities requirements eligible for short-sell (eligible securities).

Increase the minimum market capitalization of securities (market capitalization) from 5,000 million baht to 7,500 million baht.

Adding requirements regarding the consideration of stock liquidity by specifying that the shares must have a proportion of monthly trading volume of more than 2% compared to the volume of listed stocks.


Daily Limit and Program Trading

Add the daily limit for short selling in order to control risks, as well as increase the daily disclosure of cumulative outstanding short selling volume for each security to provide additional information to individual investors.

Program trading supervision measures allow the trading of securities on the stock exchange to be orderly and prevent price fluctuations, as well as to avoid inappropriate securities trading behavior and create balance among investor groups to raise the level of program trading supervision measures.


Protection against price fluctuations

Add measures to control intraday price fluctuations of individual stocks (in addition to the ceiling and floor specification that is currently in effect) by increasing the intraday dynamic price band, which will be the framework for movement of the price that is narrowed from the ceiling and floor by specifying a percentage (e.g., +/-10%) from the last trading price. If it reaches that price level, the trade will be temporarily suspended before opening a new one.

In the case of the volatility of stock prices, investors may consider changing from the trade method that is subject to trading supervision measures to a call auction instead.


Supervision of inappropriate trading behavior

Improve criteria regarding inappropriate orders by increasing the type of trading orders that affect the market in terms of both quantity and price and creating a central system for order screening.

In addition, there will also be an upgrade in the supervision of investors who send high-frequency trading (HFT) orders. This will increase the strictness for the supervision of this type of investor, for example, by having to notify or register, as well as provide information related to the Stock Exchange first, for the benefit of regulating the trading of the group.


Improving disclosure criteria

Disclosure of names of investors with inappropriate trading order behavior to all member companies for them to use the data for the consideration to take any actions against that investor, such as reducing the credit limit, which requires investors to trade through an investment advisor (trader), to increase efficiency in preventing inappropriate trading orders.

Improving the criteria for disclosing the names of shareholders to cover the case of the shareholding of NVDR stocks as well by requiring Thai NVDR Co., Ltd. (as the issuer of NVDR) to disclose the names of NVDR shareholders of at least 0.5% of shares with not less than 10 persons.


As a result, after the measures have been approved by the Stock Exchange of Thailand, the Board will arrange a hearing with those involved and discuss the matter closely and present it to the Securities and Exchange Commission (SEC) for further approval. This is in accordance with the prescribed legal procedures.