Thailand Tightens Short Selling and High-Frequency Trading Restrictions to Restore Investor Confidence
Thailand's stock exchange (SET) is introducing stricter controls on short selling and high-frequency trading to enhance investor confidence amid market volatility.
Enhanced Limits and Restrictions:
* Short selling and high-frequency trading will be restricted to stocks included in the SET100 Index.
* Currently, short selling is permitted within the SET100 Index and certain securities under specific conditions.
* High-frequency trades face no current limitations.
Rationale for the Crackdown:
The new regulations aim to address excessive price fluctuations and restore stability to the market. This follows a decline in foreign investment of approximately $10 billion over the past two years and a significant drop in the benchmark SET stock index.
Previous Measures:
As part of previous efforts to bolster market confidence, the SET mandated registration for high-frequency traders and expedited investigations into fraud allegations at listed companies.
Implementation Timeline:
Public hearings will be held before submitting the new rules to the Securities and Exchange Commission for approval. Implementation is anticipated in the second quarter.
Impact on Market Activity:
Short-selling transactions on the Thai stock market have accounted for approximately 4% of total trading turnover since August 19, 2023. The stricter rules are expected to further limit this activity.