The recently announced measures by the Stock Exchange of Thailand (SET) to curb short selling and high-frequency trading failed to lift the bourse on Thursday, but analysts say they should help to reduce price volatility.
According to SET president Asadej Kongsiri, the bourse's board approved the revision framework for confidence-building measures initially implemented in 2024.
Under the revision, short selling is limited to stocks forming the SET100 index.
The SET currently allows short selling of stocks in the SET100 index and qualified non-SET100 securities, meaning those with a three-month average market capitalisation of at least 7.5 billion baht, minimum monthly turnover of 2% over 12 months, and minimum free float of 20% of paid-up capital.
The uptick rule is being updated to apply to stocks that have a price decline beyond a specified threshold for the following trading day.
In addition, registered high-frequency traders are eligible to trade only SET100 stocks, with exceptions for market makers and certain security types.
The bourse is also revoking the minimum resting time measure and postponing the phase 2 implementation of the dynamic price band measure.
The SET plans to conduct a public hearing before submitting the proposals to the Securities and Exchange Commission for approval.
Implementation is expected by the late second quarter of this year, he said.
"The board thoroughly considered holistic approaches and measures to ensure appropriate implementation aligning with prevailing market conditions, aiming to strengthen investor confidence and create stability in the Thai stock market," said Mr Asadej.
"We hope the stricter rules will lessen excessive swings in share prices, stabilising the market and reviving investor confidence."
To ensure policy confidence, the SET is maintaining both existing and newly revised measures until the next review.
Last year the bourse ordered high-frequency traders to register before they can place orders, aiming to stabilise the market rattled by concerns over the impact of illegal short selling, program trading and corporate scandals.
The latest announcement failed to lift sentiment on the bourse, as the index slid to less than 1,250 points yesterday, dipping 1.6% to a low of 1,240 points mid-afternoon.
Total trading value increased to 52.6 billion baht.
Krungsri Capital Securities said the SET's revised measures are slightly positive for investment in the stock market because they will help reduce the volatility of mid- and small-cap stocks.
Stocks not in the SET100 account for about 20% of the exchange.
The updates should also increase investor confidence in mid- and small-cap stocks with medium- to long-term growth potential that lack excessive short-term volatility, said the brokerage.
The revised criteria is expected to support non-SET100 stocks to be accelerated to cover shorts, noted Krungsri Capital.
Stocks with short-term support in this group are still being shorted more than the average (0.15% of paid-up capital), said the brokerage.