Thailand to launch SME trading platform

01 August 2014   Category: News, Asia, Global, Thailand   By Derek Au

Thailand will launch a new trading board later this year with the intention of giving investors access to the country’s substantial SME sector.

The Bangkok Post cited Vorapol Socatiyanurak, secretary general of the Securities and Exchange Commission (SEC), as saying that the first batch of between ten and 20 SME equities will begin trading on the board this year. The board is aimed at allowing SMEs to raise funds to support business expansion.

According to the report, Mr. Vorapol said that listed companies need at least 10 million Thai baht (US$314,000) in capital and an operational track record of two years. The requirements are intended to be less stringent than the existing SME trading board, the Market for Alternative Investment (MAI), which started operations in 1999.

The MAI requests registered capital of at least 20 million baht and a two-year operating record. The latter requirement can be shortened to one year if the shares of the company are worth at least 1 billion baht.

One asset manager in the country said that the platform could be an enticing prospect for investors. "Most SMEs that have good ideas, often lack equity capital to expand,” Triphon Phumiwasana, chief executive officer of Maybank Asset Management Thailand, told Asia Asset Management. “On the other hand, investors who look for ideas are often worried about how capital is used and the transparency of the SME. By allowing the market to be the intermediary, we solve the financing problem on both sides. SMEs get the financing and investors get the transparency, protections and screening by the SEC regulations.”

Mr. Vorapol told the Bangkok Post that listed companies would have to align with the same information disclosure standards as that of the Stock Exchange of Thailand and the MAI. Investors participating in the SME market must also have good knowledge of trading risks, trade in cash, and are prohibited from making margin loan trading, according to the report.

"The SME board will help indirectly to lift SMEs' transparency in accounting and management," Mr. Vorapol was quoted as saying.

Thailand has taken steps to strengthen its IPO market. Besides introducing the new SME board, the regulator is also changing rules to allow foreign companies to launch primary listings and dual-share offerings on the domestic stock exchange. The new rules reportedly will be effective next month.