Regulator mulls protection fund for losses

The Securities and Exchange Commission has proposed a plan to set up an “investor protection fund” to compensate investors who receive financially damaging advice from brokers and fund managers.

SEC secretary-general Ruenvadee Suwanmongkol said the commission has studied similar funds in other countries like Malaysia and Australia, where the funds helped foster investor confidence.

These investor protection funds only cover those who lose money from bad advice from parties such as brokers, securities dealers, cryptocurrency exchanges and asset management firms. They do not cover other losses from decisions that the investors make themselves.

The fund would have initial capital from the Stock Exchange of Thailand, securities companies and asset management firms, Ms Ruenvadee said. For long-term funding, all intermediate companies will be the main organisations supporting the fund.

“Today we want to hear from market participants, especially all the fund’s supporters who agree and welcome the implementation of the fund, and if the protection fund can help raise investor confidence to increase exposure in capital markets for the long term,” Ms Ruenvadee said.

Pichet Sithi-Amnuai, chairman of the Association of Securities Companies, called the fund a good idea. But he said the SEC will have to clarify the objectives of the fund, specifically that it will be to protect investors but not fully guarantee investments.