Bangkok, The SEC is set to listen to opinions. New measures to control Short selling - Program Trading are expected to gradually come into effect in the third quarter of this year. Mrs. Pornanong Busaratrakul, Secretary-General of the SEC, revealed the progress. Guidelines for improving the supervision of Short Selling and Program Trading transactions or using computers to send orders. To build confidence in trading Currently, the volume of short selling is approximately 5-7% of the daily value. and is likely to increase The highest volume comes from foreign programs, approximately 79%, while small transactions account for 3%, with short transactions mainly in stocks in the SET 100 group. For guidelines for improving the supervision of Short Selling transactions, the first goal is to add a mechanism to build confidence in trading. This increases the quality of stocks that can be short sold (Eligible Securities) by increasing the conditions of stocks in the Non-SET100 group that can be sold short. By increa sing the market capitalization from 5,000 million baht to 7,500 million baht and increasing the liquidity criteria for stocks (turnover) to not less than 2% per month, and there will be improvements to the trading rules of the stock exchange (trading rules) by Add the use of short selling prices that must be higher than the last trading price (Uptick Rule) when the stock price drops by 10% or more from the previous day's closing price. Set daily short selling limits for securities (daily Short Selling limit) and disclose outstanding daily short sales (Outstanding short positions). As for the second goal, to prevent short selling that does not meet the criteria (Naked Short Selling) as follows: 1. Increase the quality of inspection work of intermediaries, namely securities companies (Securities Companies) must take the following actions. 1. Get to know the customer's work system (Know Your Process: KYP) in the case of the customer being an intermediary. To make customers know/understand the criteria and comm unicate to customers on the next level and to build confidence that intermediary customers have a system to control and monitor compliance with relevant criteria. To ensure that intermediary customers have a control system and develop a central system for Securities companies can inspect securities. and also increasing the penalty rate Securities companies that do not follow the criteria to be equivalent to foreign countries, such as in the case of Naked Short Selling, will be fined 3 times the profit (minimum 1 million baht) in the case of Short Selling transactions that do not follow the criteria. The fine will not exceed 0.3 million baht per time. 2. Amend the law to increase liability throughout the line. By punishing/enforcing the law against investors who do not follow the short selling criteria. and create a mechanism to know the true beneficiaries (End-Beneficial Owner) 3. Increase the duty of the custodian as Gatekeeper: by having the custodian notify the purpose of the transfer. For verification of the borrowing transaction For guidelines for improving supervision of the use of computers to send trading orders (Program Trading) / sending orders at high speed (High Frequency Trading: HFT) in order to increase the mechanism for building confidence in overall trading. There are guidelines as follows: 1. Proceed to be able to know the identity of customers and verify them. Register HFT investors with the Stock Exchange of Thailand (SET) so that they can follow the trading of HFT investors. 2. Review inappropriate behavior 2.1 Add inappropriate trading order characteristics to cover current trading behavior. 2.2 Establish a central system for screening inappropriate orders (Central Order Screening). 2.2 Set the minimum duration of incoming orders. before being able to cancel that order (Order Resting Time) to prevent placing and withdrawing orders too frequently (spoofing) 3. Control the fluctuations in securities prices: 3.1 Use a mechanism to increase the ceiling for intraday price movements (Dy namic Price Band) in addition to the highest-lowest price criteria (Ceiling and Floor) by temporarily suspending trading if the stock price increases or decreases by 10% of the latest trading price. 3.2 Use the auction trading method in cases where stocks are subject to trading supervision measures. 4. Investors with inappropriate behavior: 4.1 Review the criteria for action (sanction) with customers who have inappropriate behavior. 4.2 SET discloses the names of customers who send inappropriate orders to all securities companies so that they can take action as specified. Mrs. Pornanong said that the above measures were initially approved by the SET board and the matter was sent to the board. The SEC has considered and approved the principles. After this, there will be an open hearing for opinions from relevant agencies, which is expected to be able to be implemented in the 2nd quarter of this year and expected to gradually come into effect in the 3rd quarter of this year. Source: Thai News Agency