Stock Exchange Major overhaul of criteria, strict control over ‘short selling – dragging stocks’

Amid the volatility of the world stock market which affects the Thai stock market Including the decreased confidence of investors. Especially small investors in times of market stagnation. and some problems occurring in the capital market Leading to a major upgrade in supervision of the Stock Exchange of Thailand. which covers many dimensions

From the latest statement of Rongrak Panapawutthikul, Deputy Manager, Head of the Legal Division and Head of the Corporate Secretarial and Corporate Governance Group. As a spokesperson for the Stock Exchange of Thailand The goal of adjusting the criteria this time has been stated as follows: Want to raise investor confidence through 3 groups of measures:

1. Reducing abnormal fluctuations in security prices
2. Supervision of inappropriate buying and selling behavior
3. Increasing investor protection

For the first group One of the important measures to help reduce market volatility is Adjusting the criteria for selling short stocks by changing from Zero Plus Tick Rule to Uptick Rule, meaning that investors who sell short stocks must use a price higher than the last buying-selling price. Replacing the previous criteria that investors can sell short at prices equal to or higher.

In addition, the Stock Exchange Prepare to adjust the conditions for stocks that can be sold short outside of the SET100. They must have a market cap of not less than 7,500 million baht and have a 12-month average buy-sell turnover of not less than 2% by these criteria. This is expected to be available at the end of the second quarter.

At the same time, the Stock Exchange It is still in the process of providing a central platform for members to check the availability of investors’ securities before selling. To prevent Naked Shorts from occurring, adding Circuit Breakers to individual stocks is in the process of determining the details. Including raising the level of measures to control buying and selling in stocks that are very hot. By specifying the method of buying and selling by auction for stocks that are in the buying and selling supervision measures at level 2.

As for the second group, the measures to be adjusted cover many areas, such as adding an automatic halt to buying and selling (Auto Halt) for individual stocks, setting a minimum time for orders before they can be canceled/edited in order to Prevents entry and withdrawal of orders from being entered or withdrawn too frequently. Including requiring members and customers who trade in High Frequency Trading (PTs that create and send orders-sells at SET Co-location) to submit requests and filing related information. Including disclosing information about investors who send inappropriate orders to all members. And there is a central system for screening inappropriate orders and sales.

As for the third group, what has been done is to disclose a report on the outstanding short status of each stock on a daily basis. In addition, the penalty for wrongdoing members will be increased 3 times and increase the disclosure of information on NVDR holdings up to the first 10 people and holders starting from 0.5%.

Phadon Wannarat, Assistant Managing Director The securities analysis department of Yuanta Securities (Thailand) views that the adjustment of the criteria this time Especially in the matter of adopting the Uptick Rule for all stocks, it was beyond expectations. and will help reduce the volatility in the Thai stock market. Especially in the downward direction

The obvious effect is that selling short to speculate during the day will be more difficult. As a result, investors who mainly use short selling strategies are likely to be affected.

“Overall, we believe that investor confidence Especially small investors Should recover better And increasing the minimum share value criteria that can be sold short to not less than 7,500 million baht will reduce the risk of small stocks.”

From the perspective of the Stock Exchange Rongrak said that the various measures that will be issued are in order to raise the level of supervision and increase confidence (Trust & Confidence) for investors.