Block trade disclosure urged

The Stock Exchange of Thailand is considering disclosing block trade transactions to help improve risk management and decision-making processes.

Pattera Dilokrungthirapop, chairwoman of the Association of Securities Companies, said block trades, or single stock futures trades done wholesale, have become more popular with investors.

“Investors have integrated the transactions of buying stocks, single stock futures, and block trades. It would better if the market disclosed this information,” said Mrs Pattera.

She said the disclosure format is being studied.

“Disclosure will help investors have more information for decision-making,” said Mrs Pattera.

“For example, if investors see there are many block trades for some stocks, this might affect liquidity for those shares because when market makers and brokers engage in single-stock block trades with wholesale customers, they usually buy or sell that share to cover risk.”

A block trade, also known as a block order, is an order or trade submitted for the sale or purchase of a large quantity of securities.

Block trades involve a significantly large number of equities or bonds being traded at an arranged price between two parties, sometimes outside of open markets, to lessen the impact on the security price.

Sutthisit Jamdee, assistant managing director at Kasikorn Securities (KS), agreed with information disclosure suggestion.

KS estimates single-stock futures block trades will increase to more than 35 billion baht in the middle of this month, up from 19 billion in January this year.

“The growth of such block trades is because of two reasons: the rise of underlying stock prices and the rise of block-trade investors,” Mr Sutthisit said.

He said the information allows investors to make better analytical assessments of their positions.

Single-stock block trades allow investors to use less capital and buy ordinary shares through a high gearing ratio.