The Securities and Exchange Commission (SEC) said its most urgent task for next year was to restore foreign investors' confidence in the Thai capital market and prepare to restructure it to boost competitiveness.

In a press conference yesterday on SEC plans for next year, secretary-general Thirachai Phuvanatnaranubala said his agency needed to implement a policy to restore investors' confidence. He said the central bank's draconian 30-per-cent reserve requirement had significantly affected the capital market.

So far, the SEC has provided as much information as it can, he said. However, it will take time before foreign investors understand that the country's fundamentals and other regulations have not changed.

He added that after the Bank of Thailand (BOT) exempted investors in the stock market from its capital-reserve requirements, there would be no obstacles for stock investors. However, it may be more difficult for the debt market - which is still under the BOT's capital-requirement regulation - to develop further. The SEC will have to develop the infrastructure to support the capital market further.

To boost competitiveness, the SEC will try to eliminate any regulations that could be an obstacle for the development of new financial products. The SEC will also support the Thai Bond Market Association - a bond-market operator and watchdog - as well as the Thailand Futures Exchange.

The SEC said it would soon propose a draft ministerial announcement to restructure the securities business now and also after future liberalisation. Thai authorities plan to liberalise the securities business soon. The new regulations would allow securities firms to conduct a greater variety of business, including securities borrowing and lending, proprietary trading, structured products and exchange traded funds.

The issuance and trading of transferable custody receipt will increase investment channels abroad. The SEC will also encourage securities companies to invest in foreign assets abroad.

In addition, the securities watchdog will further advance mergers and acquisitions among securities firms, in order to attain economy of scale.

The secretary-general also said the SEC would continue to advocate corporate governance among listed companies.

To boost the number of institutional investors, the SEC will ask the BOT to increase the foreign-investment limit for them. The SEC is studying multiple-class funds that include various types of unit trust in the same fund. There is also a study allowing very high net-worth investors to invest in special private funds that have more investment tools than do normal private funds.

The SEC is also studying how to entice companies in Indochina with Thai shareholders and companies in Thailand with foreign shareholders to list on Thai stock market.

Siriporn Chanjindamanee

The Nation