Paper: Ministry lowers SET funding demand
Bourse against call for annual contribution
The Finance Ministry has lowered the Stock Exchange of Thailand’s (SET) seed funding requirement to 5.7 billion baht and annual contribution to at least 90% of net profit after deducting investment to the Capital Market Development Fund (CMDF), according to a paper on a public hearing conducted by the Securities and Exchange Commission (SEC).
The SET board of governors, however, said there is no need for such an annual contribution as seed capital alone is sufficient to finance the fund, the paper said.
The Finance Ministry earlier required the SET to provide 8 billion baht of initial funding and contribute 90% of its net profit yearly to the CMDF. The SET, together with securities firms, had strongly opposed the ministry’s requirement, saying the stock exchange will not have enough money to improve or even finance the maintenance of the trading system and that the objectives of the CMDF’s capital usage is unclear. The outcry compelled Finance Minister Apisak Tantivorawong to try to settle the row.
The seed funding and contribution requirements to the CMDF are part of the Market Development Plan for 2017-22, which aims to separate market development functions from exchange functions.
“As seed money to be provided by the SET is sufficient to finance operation of the CMDF in the long run, so the board sees no need to give contributions to the fund every year,” the SET board of governors said in the paper.
The Association of Securities Companies, Tisco Securities chief executive Paiboon Nalinthrangkurn and former SET executive vice-president Sopawadee Lertmanaschai said in the public hearing that the annual contribution should not exceed 50% of net profit to leave the SET enough money for future development.
They said the SET will not have enough funding for business expansion if it is required to contribute at least 90% of annual net profit.
Thai Bond Market Association president Tada Phutthitada, the Federation of Thai Capital Market Organizations (Fetco) and the Thai Listed Companies Association agreed it would be enough for the SET to contribute only the seed money.
The SEC has thrown its support behind the Finance Ministry, saying SET contribution to the CDMF after deducting investment will leave the bourse sufficient money for future business expansion. Moreover, the SET can request the CMDF provide financial support if it needs more funding to beef up competitiveness or reinforce its financial position, the SEC said.
For the seed money, the SET board of governors said 4.5 billion baht would be an appropriate amount to allow the SET retain its competitive edge. Mrs Sopawadee proposed other agencies relevant to the capital market should jointly contribute seed money to the CMDF.
Fetco and Mr Tada said the seed money contribution should not cause the SET to have operation problems in the future.
On the CMDF’s status, all parties taking part in the public hearing agreed it should not be a state agency as it could be burden on the fund’s operations.