The Stock Exchange of Thailand will tighten curbs on short selling and high-frequency trading as it attempts to revive investor confidence in the world’s worst-performing equity market.
Short selling and high-frequency trading will be limited to stocks forming the part of SET100 Index, SET president Asadej Kongsiri told a press briefing on Wednesday.
The bourse currently allows short selling of stocks in the SET100 Index and other securities with some conditions, while there are no limits set on high-speed trades, he said.
The crackdown on trades popular with hedge funds and day-traders is the latest attempt by Thai regulators to restore confidence in a market in which foreign investors have been net sellers of 340 billion baht in the past two years. So far this year, they have been net sellers of 4.3 billion baht.
The benchmark SET Index has slid about 10% this year, making it the biggest loser among the world’s major indices, as listed companies report poor earnings amid a sluggish economic outlook.
“We hope that the stricter rules will lessen any excessive swings in the share prices,” said Mr Asadej, a former Deloitte executive who took office on Oct 1. “This will stabilise the market and revive investor confidence.”
The exchange last year ordered high-frequency traders to register before they can place orders in a bid to stabilise the market that was battered by concerns over the impact of illegal short selling, program trading and corporate scandals.
Authorities have also fast-tracked investigations into fraud allegations at companies including Energy Absolute Plc and Stark Corp.
The bourse will hold a public hearing before seeking the approval of the Securities and Exchange Commission and implementing the new rules. The tighter curbs are expected to take effect in the second quarter, according to Mr Asadej.
Short-selling transactions on the Thai stock market were valued at about 240 billion baht since Aug 19 last year, when the stock exchange began publicly publishing the information, according to its website. That accounted for about 4% of total trading turnover.