Thai SEC Reveals Measures to Keep Short Selling and HFT in Check

The Securities and Exchange Commission (SEC) of Thailand stated that the committee is preparing measures to strengthen the supervision of short selling and the use of algorithmic trading (program trading), following complaints from the public over illegal short selling and bot trading that cause the market to fluctuate.

The committee planned to enhance the mechanisms for building trust and confidence in securities trading with revised trading rules of SET to limit the volatility on securities prices by imposing the uptick rule on any securities with a drop of 10% percentage change, while also imposing a daily short selling limit on each eligible security.

Non-SET 100 stocks will be eligible for short selling to meet the market capitalization and turnover rules, and the daily short selling outstanding will be disclosed.

As for the rules to prevent illegal short selling, known as naked short selling, the SEC set several ground rules for securities companies to communicate with clients, while also establishing post-trade monitoring systems for random inspection.

Additionally, the SEC set a guideline to strengthen the supervision of the use of algorithmic trading (program trading) or high frequency trading (HFT), enforcing HFT to register with the Stock Exchange of Thailand (SET) to enable tracking of their trading transactions. The committee will also review improper trading behaviour and impose the dynamic price band mechanism, in addition to the ceiling and floor criteria, to suspend securities trading when the securities price increases or decreases 10% from the latest price.