SET mulls quicker clearing

The Thai share market is considering shortening the times for clearing and settlement of securities trading to two business days from three now, effective next year.

Bordin Unakul, executive vice-president of the Stock Exchange of Thailand (SET), said such a move would be aimed at reducing the risk of trading defaults for sellers, investors and brokers alike.

“Trades can be finished more quickly, meaning investors who sell stocks will receive their money faster as well. Brokers can collect their money faster, resulting in more liquidity for future transactions,” he said.

Mr Bordin said the SET could not make the move immediately because some trading orders were sent from foreign investors located in different time zones, which required three business days to complete.

“If we proceed with settlement and clearing in only two days for foreign investors, technical problems could occur. The SET must find a solution to ensure foreign trading is not affected before introducing two-day service,” he said.

Mr Bordin said a few places in Asia such as Taiwan and Hong Kong completed transactions within two days.

Clearing and settlement is operated by the SET subsidiary Thailand Securities Depository Co (TSD).

TSD operates post-trade services as a securities deposit services provider and is Thailand’s major share registrar.

“Three days for clearing and settlement is on a par with global standards, but upgrading to two days will reduce the risk of mistakes in future settlements, especially for futures trading,” Mr Bordin said.

He said the SET was also on course to develop a multiple-currency trading platform, scheduled to start this year. The plan is to begin with major currencies such as the US dollar, yuan, yen and euro.

The SET developed equity clearing and settlement systems in 2013 to keep pace with global standards. It also offers futures trading.

“This system development is part of plans to improve our competitiveness and become a regional trading hub,” Mr Bordin said.

He said the SET was developing a digital exchange project with TSD offering digital counter services, digital subscription and improved efficiency for clearing and settlement for farm futures products soon to be transferred from the Agricultural Futures Exchange of Thailand.