The Thailand Securities Exchange Commission has issued a draft of proposed changes to the takeover rules for public consultation.
The draft changes: The draft changes published are as follows:
(1) To require securities companies with clients that are securities companies under foreign law and act as brokers or agents in trading or exchange of securities for others to conduct Know-Your-Process (KYP) due diligence. This is to ensure that clients who are foreign securities companies understand relevant regulations and communicate these to their own clients. It also aims to ensure that clients have systems in place to monitor compliance with these regulations;
(2) To require securities companies to adopt systems for monitoring and inspecting securities trading transactions of clients;
(3) To require that securities companies enter into agreements with clients before commencing services, ensuring that clients agree to pay a fine if the securities company is penalised by the SET or the clearing house, due to client’s failure to comply with regulations related to short selling transactions. Securities companies would also have the duty to ensure compliance with the agreement;
(4) To require that securities companies set up a system for receiving, sending and transmitting client orders into the SET system in accordance with SET criteria and establish an order transmission system capable of distinguishing short selling from long selling transactions;
(5) To require securities companies to examine clients’ securities trading orders to verify that clients own or borrow monies to purchase securities before executing trading orders; and
(6) To require that securities companies establish a system for post-trade monitoring and examining clients’ executed trading transactions through random inspection of potentially inappropriate short selling and long selling transactions.
Comment: The revised rules are likely to be issued within the next few months and will be published on the SEC website.
Stephen Frost, Wissen & Co Ltd, 1168/42 Lumpini Tower, Level 17, Lumpini Rd, Sathorn, Bangkok 10120, Thailand
Tel: +66 2 259 2627-9
Email: stephen.f@wissenandco.com
Website: www.wissenandco.com