Trading

• Securities Traded on the SET
• Trading Mechanism
• Trading Boards
• Order Types 
• Trading Data (real time)

• Securities Clearing & Settlement
• Shares Depository
• Share Registration 

Information Disclosure

• Information Disclosure Requirements
• NP, NR, H, SP Signs 

Member Supervision

• Trading Activities & Operations
• Margin Loans for Clients
• Clearing and Settlement System
• Members' Financial Status
• SET's Other Regulations 

Market Surveillance

• Surveillance Systems
• DS Sign 

Information Dissemination

• SETINFO
• INTERNET
• Mass Media & Publications 

Index on the SET

• SET Index
• Sectoral Indices
• SET 50 Index 

New Products

• Short-term Warrants
• The SET 50 Index
• Thai Trust Fund 

Foreign Investment

• Foreign Investment
• Five Steps to Invest in the SET
• Foreign Investment Funds
• Related Laws & Regulations
• Foreign Exchange Liberalization
• Foreign Shareholding Limits
• Taxation
• Tax Treaties
• Stamp-Duty 

Trading

Securities Traded on the SET

Securities traded on the SET are ordinary shares, preferred shares, unit trusts, warrants, debentures. At the end of June 1996, there were 564 securities consisting of 441 ordinary shares, 70 unit trusts, 38 warrants, 9 preferred shares, 5 debentures and 1 convertible debenture being traded on the SET. 

Trading Mechanism

The SET adopted a fully-computerized trading system, namely "The Automated Syatem for the Stock Exchange of Thailand" or "ASSET", to replace its floor trading system since April of 1991. Relative to the previous floor trading system, the ASSET system improved trading efficiency. This has contributed to the rapid expansion of trading volume to the SET. Since October 1994, the ASSET has been able to handle up to 800,000 orders and 600,000 transactions per day. 
Under the ASSET system, there are two main trading alternative : 

• Automatic Order Match (AOM)

The ASSET system is a system for the automated-matching of transactions. Brokerage members can key in their orders from their offices and these orders will be sent to the SET's mainframe computer and executed according to price and time priority. Each transaction can be confirmed back to the member's office within seconds. 

 
• Put-Through (PT)

The buying and selling brokers execute the orders by private negotiation and then confirm the transactions through the SET's computer. 

Trading Boards

Trading is conducted on four separate boards : 
• The main board for regular trading, 
• The special board for odd lots, government bonds, and debentures trading, 
• The foreign board for foreign investors who require shares to be registered in their names, 
• The big lot board for big lot trading. 

TYPE OF TRANSACTION	TRADING VOLUME AND CONDITIONS
Regular trading on the main board	At least 1 board* lot but not over 1 million shares/units/warrants
Trading on the special board
-Odd lot	- Less than 1 board lot
-Government Bonds, Debentures and Convertible Debentures	- Less than 10 million Baht (US $ 0.4 million) in market value, or less than 10 percent of the total par value such securities
Trading on the big lot board	- equal or greater than 10 million baht (US $ 0.4 million) or
	equal or greater than 10 percent based on par value, of the total value of such securities calculated, in the stock exchage
	- must obtain approval from the SET
Trading on the foreign board	- Securities must be held by foreigners
	- AOM    -Price & Time Priority    -Price Move    -No Floor & Ceiling
	- PT    -No Price Move    -No Floor & Ceiling

*board lot = 100 shares 

Trading systems at the SET, both AOM and PT, are utilized according to the type of board that the shares are traded on, as shown in the table below : 

TYPES OF BOARD	TRADING SYSTEM
Main Board	AOM
Special Board
- Odd Lot	AOM
- Government Bonds, Debentures and Convertible Debentures	PT
Big Lot Board	PT
Foreign Board	AOM OR PT



Since February 1993, the SET has introduced four additional type of orders that investors can use for sending in their orders to buy or sell stocks in the SET. These types of orders are : 

• Non-limit Price Order


1. Market Price Order (MPO). An order to buy or sell a stock at the best price currently prevailing. 
2. AT-The-Open Order (ATO). An order to buy or sell a stock at opening price. 

 
• Conditioned Order


3. Immediate-Or-Cancel Order (IOC). An order to buy or sell a stock immediately at only one time at a certain specific price even though there is more than one transaction in such trading . If there are securities remaining from such an offer, it shall not be considered as a bid or an offer which remains pending. 
4. Fill-Or-Kill Order (FOK). An order to buy or sell stock immediately at only one time at a certain specific price for all securities of such an offer even though there is more than one transaction in such trading. If this condition has not been met, it shall be deemed that there has never been such a bid or offer. 

Back-Office Systems

The Thailand Securities Depositary Co., Ltd. (TSD) is the only clearing house and control securities depositary, in addition to being the industry's main share register. It serves the SET's member companies, sub-brokers, custodian banks, members of the Bond Dealers' Club and members of the Bangkok Stock Dealing Center. 

Securities Clearing & Settlement

The traded securities as reported on the TSD's and its members' computer terminals need to be cleared and settle according to the following procedures : 

EFFECTIVE ON  12 JUNE 1995	THAI INVESTOR	FOREIGN INVESTOR/    MUTUAL FUND           CO.	SUB-BROKER
Buy
Date for customers to make payment for the purchase	Within T+3	Within T+4	Within T+3
Date for member to deliver the securities to customer	Within T+4	Within T+4	Witin T+4
Sell
Date for member to make payment for the sale	Within T+3	Within T+3	Within T+3
Date for customer to deliver the securities to the member	Before 12.00  noon of T+1	Within T+3	Within T+2


Moreover, the TSD sends a report of net trading and net cash balance to its members via computer network at, approximately, 6.30 p.m. of each trading day. In case the clearing house's computer system fails, a written report of trades and net cash balances will be sent to the members on the following day. 

Share Depository

Shareholders are able to deposit their shares through the TSD's member companies. The TSD has dematerialized the physical share certificates and kept record of the total amount of shares deposited through the scripless system. The TSD acts as a nominee for the shareholders by transferring the names of the share depositors to the "Thailand Securities Depository Company Limited for Depositors". In this regard, the TSD has divided the depository accounts into two types : for local investors and for foreign investors. 
To deposit shares with the TSD,the member companies need to submit application forms of share depository with their share crtificates. In the case of foreign investors, the depositors must specify on the back of share certificates that the "Thailand Securities Depository Company Limited for Depositors" is their transferee. For foreign investors who purchase the securities on the main board, their account are classified as local. They should transfer their accounts from local to foreign in order to receive full benefits from the securities issuers. However, this will be allowed only when the room of foreign shareownership for such securities is available. 

Share Registration

The share registration applies to new securities,transfer of ownership, maintaining a shareholder's book, and dividens and benefits payments. It can be operated through the scripless system or by issuing physical share certificates. The Share Registrar has created a Central Registration Identification Number (Central I.D.) for each investor. Each investor has only one Central I.D. number even though he/she may own more than one stock. This I.D. number may serves to reduce the duplication of information on the investors in the Share Registrar's database. 

Information Disclosure

Information Disclosure Requirement

After being listed, the company must disclose the following isformation promtly, accurately and publicly within a specified tine frame. 

TYPES OF INFORMATION	TIME PERIOD
1.  - Quarterly Financial Statement reviewed by the auditor      - Consolidated Statement if the company has a subsidiary	-  Within 45 days from the end of each quarter.
2.  - Semi-annuall and/or Annual Financial Statements (depending on the company's accounting periods) audited by the auditor.      - Consolidated Statement if the company has a subsidiary	-  Within 3 months from the end of the accounting period or within 60 days to replace submitting of the quarterly financial statements for the end of the company's accounting period.
3.  Annual Report	-  Within 4 months from the end of the accounting period.
4.  Disclosure Report of Additional Information (Form 56-1)	-  Within 3 months from the end of the accounting period.
5.  Information on operation and financial structure that might affect trading shares, interests of sharholders and investers' decisions,	-  To be reported at least 1 hour prior to the next trading session.  If the information is reported during trading session, the SET willhalt or suspend trading of that security until the information is thoroughly disclosed to the public.

NP, NR, H, SP Sign

In order to ensure fair and efficient trading, the SET applies supervisory signs to the listed securities and discloses related information to the public. These signs; NP (Notice Pending), NR (Notice Received), H (Trading Halt) and SP (Suspending), will be displayed beside the name of the stocks in the following cases : 

Notice Pending Sign (NP) 
1. When the SET observes an unusual price fluctuation of any stock. In such case, the listed company concerned will be required to furnish the SET with an explanation of the unusual price movements at once. 2. In case a company fails to submit a quarterly or annual financial statement to the SER within the prescribed time. 

Notice Receive Sign (NR) Upon receiving the relevant information from the company, the SET will substitute a Notice Received (NR) sign for the NP sign. 

Trading Halt Sign (H) 
1. When critical changes or major events concerning listed companies occur during trading hour, and the companies have to clarify the information to the SET immediately. 
2. When trading conditions indicate that some groups of investors may have received some important news or information about the companies before they are formally disseminated to thr public. 
3. When the companies ask the SET to halt trading their shares in order to clarify the news during trading hour. 
4. When there are major events which have critical influence on the trading system. 
The H sign temporarily prohibits the purchase or sale of a particular listed securities for not more than one trading session. 

Suspending Sign (SP) 
1. If the company does not adhere to regulations on disclosing the pertinent information, the Suspending sign (SP) will replace the NP sign and the trading of that stock will be prohibited. 
2. If the listed company concerned does not adhere to the disclosure regulations or if its price changes without ligitimate reasons and the company fails to give any explanation for the change as prescribed by the SET. 
3. If the company has not yet submitted the requires financial statements within 5 business days after posting of an NP sign. 
4. If the company fails to submit the required financial statement promtly for two consecutive times, the SET will suspend the trading of that company's stock on the third time of their failure to submit their financial statement. 
The SP sign temporarily prohibits the purchase or sale of the listed securities for a period longer than one trading session. 

Member Supervision

The SET regulates and supervises member companies in the following areas : 
-Trading activities & operations 
-Margin loans for clients 
-Clearing and settlement system 
-Members' financial status 
-SET's other relevant regulations 

Trading Activities & Operations

To supervise the member firms in terms of trading and operation, the SET has regulated the rates of commission and the price regulation on trading. 

• Brokerage Commission


The commission fees paid to a broker for either buying or selling securities are designated by the following table : 

TYPES OF SECURITIES TRADED	COMMISSION RATE
Ordinary Shares, Preferred Shares and Warrants	0.5% of value traded  (minimum 50 baht or US $ 2)
Unit Trusts	0.3% of value traded (minimum 30 baht or US $1.20)
Government Bonds,  Debentures and Convertible  Debentures	0.1% of value traded (minimum 50 baht or US $2)

• Price Reguulations


Opening Price : 
Prior to the regular trading session, pre-opening orders can be sent to the SET but they will not be matched. They are simply placed in bid/offer queues according to a price and time priority and price is counted as the first priority. 
The opening price is determined by the price that generates the most trading volume. If there is more than one price, the one closer to the previous closing price will be chosen. If there is still more than one price, the higher one will be chosen. The stock prices can fluctuate within the range of + or - 10 percent of the main board's last trading price on the previous trading day which mean that the price of each stock can not drop below 10 percent floor or increase beyond 10 percent ceiling. 

Price Move : 
Price move, prescribed by the SET for securities trading, varies according to the market price of each stock as follows : 

MARKET PRICE (BHT)	PRICE MOVE (BHT)
from 0 to less than 10	0.10
from 10 to less than 50	0.25
from 50 to less than 100	0.50
form 100 to less than 200	1.00
from 200 to less than 600	2.00
from 600 to less than 1000	4.00
greater or equal than 1000	6.00

Margin Loans for Clients

Margin account is designed to enhance the customers' capacity to trade securities. A credit line will be provided by brokers to their customers for the purpose of securities transaction. The initial margin rate is set by the Bank of Thailand and adjusted periodically to suit the market situation. Two types of margin accounts adopted by the SET are as follows: 

• Settlement Margin


This type of margin allows the investors to pay back their loans to their brokerage firms within the time specified by the SET, a maximum 30 days from the day of stock purchase. Otherwise, stocks held by investors will be sold off by their brokerage firms in order to clear their balance accounts. 

• Maintenance Margin


Maintenance Margin (M.M.) has been implemented by the SET since October 1, 1993. The investors do not have to pay the total loan as long as they can maintain the minimum percentage of the M.M. which is calculates as the proportion of the investors' equity (or the market value of the collateral stocks plus the collateral promissory notes minus the amount borrowed) to the total value of the stocks held on the current day. If the stock price declines to the point where the equity drops below 25 percent, the investors will receive a margin call to provide more equity. The brokerage firms will have the right to sell off investors' stocks to repay the loans (known as forced sale) if the share price drops to or below the 15 percent mark while the investors remain indecisive. 

• Credit Balance


In the near future, the Set plans to implement a credit balance system which will replace the existing margin systems. Credit balance system will also provide a loan for the purchase of securities. The investors must place collateral with their securities companies for the amount not less than the initial margin. The amount of collateral in excess of total loan to buy securities for each investors is called the "Credit Balance" which will also bear interest. On the other hand, if total debt is greater than the collateral value, or if there is a "Debit Balance", the investor will have to pay interest to the securities companies. 

Clearing and Settlement System

The laws and regulations authrized the SET to supervise its clearing and settlement activities of its members although the TSD (a SET's subsidiary company) is responsible for such back-office system. The member supervision procedure is provided by the SET to safeguard investors' benefits. Various applicable fees are as follows : 

• Fees


The two main securities fees are : 
1. Securities rgistration fees which are charged for registration services as follows : 
• shareholder data processing fee of 1 baht (4 U.S. cents) per shareholder 
• annnual fees for common share and warrant which are shown below : 

REGISTERED CAPITAL (MILLION BAHT)	FEE (UNIT: BAHT PER REGISTERED CAPITAL OF 1 MILLION BAHT)
less than or equal to 1,000	700
1,001-2,000	650
2,001-5,000	650
5,001-10,000	600
greater than or equal to 10,000	550

• annual fee of 0.02 percent of the bond value issued 
• securities transfer fee of 10 baht (40 U.S. cents) per item


2. Securities depository fees are such as : 
• Monthly fee of 9,000 Baht (US$ 360) for SET members 
• securities withdrawal fee of 65 Baht (US$ 2.60) per item 
• Custody fee of 0.00025 percent of securities value per month 
• Penalties The securities clearing and settlement penalties can be devided into two categories :

1. The clearing house willl penalize members who default on late cash payment by double charging the total clearing amount per each tradiness. 
2. The clearing house will penalize members who default by law share delivery . The fine can range from 0.5 percent to 3075 percent of the total value of delivered stocks, depending on the number of late working days, but not exceeding 200,000 Baht (US$ 8,000) per tradiness. 

Members' Financial Status

Member companies are required to submit both their audited semi-annual and annual financial reports, quarterly listing of top 20 shareholders, changes in executive management and other pertinent reports. The SET will review these reports and evaluate the financial condition of the members. 

SET's Other Regulations

• Sales Licenses


The SET has issued regulations on qualifications of marketing officers, especially, the compulsory test to acquire a sales license which has been in effect since October 15, 1994. The test is concerned with all trading rules, securities analysis and ethical conducts as a marketing officer. This aims at upgrading the qualification for marketing officers who are responsible for giving investment advice to their customers. On January 13, 1995, the SET announced its guidelines on penalties imposed on members' licensed marketing officers who did not comply with regulations on sales licenses. 

• Code of Ethical Standards

The SET has established the Code of Ethical Standards which is composed of the principles and the core rules. The SET's Board of Directors has set up an Ethical Standards Subcommittee which which consists of the SER's President (or his representative), a legal expert, on officer of the SET as a secretary, and no more than five representatives elected by the SET members. One out of the five representatives has to be a member of the SET's Board of Directors, and the rest of the representatives have to be in the member companies' Board of Directors. The subcommittee is reponsible for upholding the ethical standards of the operations of the members. If there is a violation of ethical standards, the subcommittee will decide on the penalties and recommend and penalty consederation to the SET's Board of Directors. 

• Arbitration

The SET's Board of Directors has approved the establishment of the Arbitration Committee and the Arbitrarion procedures. The main objective is to settle disputes concerning securities trading activities on the SET among brokers and investors. Furturemore, the SET has established a unit within its organization to be responsible for facilitating the arbitration. When any dispute occurs, the Arbitration Committee will be set up and will be consisted of three parties: a Chairman appointed by the SET's Board of directors and representatives appointed by each dispute party. 

• Compliance Unit

The SET has required its member companies to establish a compliance unit. This compliance unit functions as internal auditors of members' operation with an aim to prevent any illegal or noncompliance practices. 

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Market Surveilance

Surveilance System

Since 1983, the SET has set up an effective surveilance system to detact any irregular patterns of price and volume movements. The system is semi-computerized and closely observed by trained personnels. The surveilance process can be divided into two parts : 
1. Stock watch and stock alert 
2. Investigation 
Both stoock watch/stock alert activities work simultaniously and are designed to monitor any peculiar trading movements of listed stocks. The system will alert the assigned officers through audio signals and visible colored labels for any irregularity. Preliminary investigation into the cause of the alert will follow. Appropriate measure in the form of warning signs "H" (trading Halt)/ "SP" (suspension), etc., will be imposed if necessary. 
The second part refers to the "investigation process". If serious wrongdoing occurs, the SET will set up a subcommittee to conduct an investigation, and forward the results obtained to the SEC. 

DS Sign (Designated Securities)

The DS sign notifies investors that the trading of listed securities through the securities trading system has been made at a price or in a volume, during a certain period of time, which deviates from the normal condition of the securities trading without reasonable grounds. In such situation, the investors can purchase th DS posted stocks only with cash and the sellers must deliver the share certificates immediately or before next trading day. Furthermore, members shall not purchase such securities for their own account. The listed firms must be ready to provide relevant information which influenced trading of such stocks to the SET before noon of the nest trading session. 


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Information Dissemination

The SET recognized the benefits and the significance of information towards investment decisions. Therefore, the dissemmination of prompt, accurate and fair information on securities trading activities and on listed companies to investors through various media channels is a major responsibility of the SET. 

SETINFO

Through the SETINFO (SET Information Service), the SET directly receives information from listed companies and from the SET's computerized trading system. The SETINFO provides various useful information as follows : 
• Pricing Reporting System (PRS) provides real time reports on securities trading and current news;
• SET's Information Management System (SIMS) provide the background information on listed companies, relevant news updates, financial statements, and historical trading data;
• Download information (daily trading summary) which can be classified into two categories :
1. On-line quotation -a daily quotation at the end of trading day and key ratios and figures (e.g. P/E, P.BV, dividend yield, etc.) 
2. On-line financial statement (querterly audited financial statement); 
• Data request provides the information upon the subscribers' request in the form of diskette. The information is categorized into two main groups; information on listed companies and securities trading data; 
• Data distributors -the SET allows qualified data agents who have their own computer networks to disseminate (on-line) the information received from the SET to their clients. Currently, Linestel Co., and SiamSat Network Co. are authorized to conduct this type of business. 

INTERNET

The SET's home page at the address "http://www.set.or.th" includes the SET index, trading information (price and volume of listed stocks) and daily news released by listed companies. Beside real time quotation, general information regarding the SET as well as reports on monthly economic performance prepared by the Bank on Thailand (BOT) are available on the internet. 

Mass Media and Publications 
Besides the information dissemination via electronic system such as SETINFO and the INTERNET, the SET has also provided trading information, information regarding the SET's brokerage members/listed companies and educational programs on stock market through channel 9 TV, cable television network, and radio broadcasts. 
The SET offers publications which investors or interested persons can regulary subscribe such as the Annual Report, the Stock Market in Thailand 1996, Monthly Review, Fact Book, etc.. In addition, the Nation Publishing Group Co., Ltd. is authorized to publish the "SET Daily" a SET official daily newspaper designed to dissemminate information on securities trading at the SET, and news on listed aompamies to the public. 
Alternatively, investors may visit the Investor Information Center and the SET's library at the SET's main office at Sindhorn Building Tower 1, 132 Witthayu Road, Bangkok 10330, for information on listed companies, the capital market, and economic/financial data. 


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Index on the SET

SET Index

The existing SET Index is a composite index which is calculated from stock prices on the main board: The SET Index is the market capitalization weighted price index that compares the current market value of all listed ordinary shares with that on the base date, Aprril 30, 1975, when the SET index was set at 100 points. Its calculation is adjusted according to new listing, delisting, and all types of capitalization changes. 

Sectorial Index

Beside the SET index which is calculated from share prices of every ordinary shares on the main board, there are, also, sectorial indices calculated from the ordinary share prices in each sector. The calculation method is identical to the SET Index calculation method. 

SET 50 Index

To accommodate the future issuance of index futures and index options in the future and to serve as a benchmark for measuring the performance of fund managers investing in the Thai Stock Market, the SET 50 Index was launched on June 17, 1996. It is market capitalization weighted index calculated from share prices of top 50 listed companies in the SET with large market capitalization and high liquidity. The lis of component stocks in the SET 50 Index will be revised every 6 months. 


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New Products

In order to increase the market stability and liquidity, the SET introduced new financial instrument such as short-term warrants, the SET 50 Index and Thai Trust Fund (TTF) during the 1995 to mid-1996 period. 

Short-term Warrants

According to Thai Cevil and Commercial Code, rights offering can be issued only to company's existing shareholders and are not transferable. As a consequence, there is no official secondary market for subscription rights. When a company issues right offering, existing shareholders in Thailand only have choices of exercising the rights, allowing the rights to expire without exercise of rights, or sell the shares before the XR (Ex-Right) date. To eliminate this limitation, short-term warrants have introduced by the SET. 
Instead of issuing rights to existing shareholders, listed companies can take issue short -term warrants to existing shareholders as an alternative. Short-term warrants have been specified as "securities" by the SEC in Thailand according to Section 4(10) of the Securities and Exchange Act B.E. 2535 and, therefore, they can be transferred and traded at the SET. Short-term warrant will expire within 2 months, as of the date of issuance and notification to all existing shareholders of their rights to subscribe new shares. 

The SET 50 Index

Since the first day of the SET's operation in 1975, the SET index (a market capitalization weighted index calculated from all common stocks listed on the SET) serves as the key indicator for the overall movementof securities in the market and as a benchmark for measuring the performance of portfolio investment in Thailand. 

However, the wide range and high cost to investors, make the SET index unsuitable as an underlying index for index futures and index options scheduled to be launched in Thailand in the near future, Thus, investors may have to hedge against their portfolios by investing in every listed company covered by the SET Index. Consequently, the SET saw the need for a new index which will alleviate the deficiency. 

A prior study indicates that an index calculated from 50 listed stocks having large market capitalization and high liquidity can trace the total market movement of at relatively low cost; hence the name "SET 50 Index". 
The computation methodology of the SET 50 Index is the same as that of the SET Index (e.g. market capitalization weighted average method). The 50 selected stocks composed in the SET 50 Index will be revised every 6 months during December and June of each year. The calculation of the SET 50 Index using the revised list of securities will commence on every first trading day in January and July. With the new list of 50 selected securities, the index calculation will be adjusted to ensure the uninterruption of the index. 

Thai Trust Fund

According to the Announcement of the National Executive Counsil No. 281 shareholding in equity of Thai companies is limited to a maximum of 49 percent and a maximum of 25 percent in the banking/finance sector. As the Thai stock market becomes more popular among foreign investors, the supply of shares for foreign investors limited by the shareholding limits. Thus, the Thai Trust Fund (TTF) has been introduced to alleviate the problem of foreign shareholding limits. 
Like onshore country funds, the TTF will be managed by a Thai mutual fund management company of Thai nationality; making investment beyond foreign shareholding limits possible. It will be an open-end mutual fund investing in Thai stocks listed on the SET's main board and issuing investment units for foreing investors. One unit of the TTF will be equal to one share of a listed company. Holders of the TTF investment unit will be entitled to receive all financial benefits allocated for ordinary shareholders of such company such as dividend yields, capital gains and rights issues. However, the TTF investment unit holders will not have the right to attend and vote in the shareholders' meetings of an underlying company. On the other hand, listed companies can participate in the TTF scheme on a voluntary basis and can impose a number of shareholding limit to be held by the TTF. The TTF is Expected to be launched by the third quarter of 1996. 


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Foreign Investment

Foreigh investment in Thailand has been increasing gradually for years as shown in the table below : 

YEAR	FOREIGN INVESTMENT  (US $ MILLION)	PERCENTAGE OF TATAL TURNOVER
1982	9.48	2.05
1983	13.48	1.83
1984	47.15	5.51
1985	63.49	4.84
1986	183.66	7.76
1987	1,014.36	10.36
1988	1,602.07	12.86
1989	3,869.73	12.90
1990	7,186.70	14.40
1991	5,177.51	8.21
1992	10,659.79	7.20
1993	29.707.89	16.97
1994	35,226.66	20.95
1995	32,168.63	26.33
JAN-JUNE' 96	19,559.10	33.26

NOTE: US $1 IS APPROXIMATELY 25.28 BAHT (1982 - 1996) 

Five Steps to Invest in the SET

Step 1: Appointing custodians, correspondent banks and brokers 
To invest in the SET, foreign investors must appoint custodians, correspondent banks and brokers on their behalf. Normally, local commercial banks provide both custodian services and ast as correspondent banks for clients. It is suggested to use only one bank which faciliates both types of services. 

• Main responsibilities of a custodian are as follows :

-signing documents related to securities bought or sold 
-making and receiving payments to and from brokers 
-arranging securities transfers to entitled clients 
-retaining share certificates for safe keeping 

• Main responsibility of a correspondent bank is as follow :

--bringing in capital and remitting money 

• Main responsibility of a borker is as follow :

-trading shares on foreign investors' behalf 

Step 2: Bringing in money 
An inward remittance of foreign exchange for portfolio investment must be conducted through a correspondent bank. Currently, it is not required to file any report with the Bank of Thailand. The correspondent bank will register the brought-in money for its clients in order to ease the process of approval for repatriation of proceeds. Only Thai currency is accepted as a medium in trading securities at the SET. 

Step 3: Order placing and execution 
Orders, bur or selll, must be placed through SET's brokerage menbers. Stock trading at the SET is fully computerized in terms of execution and confirmation. 

Step 4: Clearing and Settlement 
All trading settlements at the SET are operated through the SET's clearinghouse on a T+3 working day basis, when T is the trading day. 

Step 5: Currency Repatriation 
Since 1988, the Ministry of Finance and the Bank of Thailand (BOT) have liberalized the foreign exchange control. Currently, foreign capital inflows need not be registered as previously required. Repatriation (net of applicable taxes) of investment funds, dividends, profits, loan and interest payments can be made freely without prior permission from the BOT. Commercial banks are authorized to approve the purchase of foreign exchange for remittance abroad without limit. 
Upon a sale of securities, stock brokers custodian bank will calculate the capital gains tax payable based upon the purchase information i.e. debit and credit contract notes as specified in announcement made by the BOT. 

Foreign Investment Funds

Foreign investors can invest directly in the SET or invest through foreign funds which are defined as onshore funds and offshore funds. 
According to the SEC Act, onshore funds are foreign funds registered in Thailand and their investment plans are registered and approved by the office of the SEC. Fund managers of anshore funds must be Thai. According to all the above qualifications, onshore funds are not subject to foreign shareownership restrictions. 
Offshore funds are foreign funds registered abroad. They are treated as general foreign institutional investors and, therefore, subject to foreign shoreownership restrictions. 

Related Laws and Regulations

Foreign Exchange Liberalization 
The Exchange Control Act, B.E. 2485 (A.E. 1942) governs all matters related to foreign exchange. In general, foreign currency matters are regulated and authorized by the Bank of Thailand (BOT). Since May 22, 1990, however, foreign exchange control has been considerably relaxed by the BOT. 
There is no restriction on the import of foreign currency such as investment funds, offshore loans, stc. Such foreign currency, however, must be sold or exchanged into Thai Baht or deposited in a foreign currency account with an authorized bank within 15 days from the date of receipt. 
Repatriation (net of applicable taxes) of investment funds, dividends, profits, loan and interest payments can be made freely without BOT's approval. 

Foreign Shareholding Limits 
The Alien Business Act, the Announcement of the Nation Executive Council No. 281 generally limits foreign shareholding in Thailand to a maximum of 49 percent. However, the foreign shareholding can be further limited by other announcement. It may be imposed by any Thai Company according to the Company's Articles of Associations. 
On the other hand, for banks and finance companies, foreign shareholding is limited to a maximum of 25 percent according to the Commercial Banking Act and the Finance, Securities and Credit Foncier Business Act, respectively. 

Taxation 
Generally, foreign investors are subject to taxation on their income earned from securities investment including capital gains, dividends and interest. This the earned income is also subject to 10-15 percent withholding tax, depending on whether the recipient is an individual or institution, as well as the type of income. For individual investors, capital gains from securities traded on the SET are exempted from income tax. 
The summary of income tax regulation on securities investment by foreigners are as follows : 

TYPE OF INCOME	TAX RATE
1.  Income from direct investment in the SET
Capital Gains:
- Individual Investor	- Tax free
- Juristic Investor	- 15% withholding tax
Dividends:
- Individual Investor	- 10% witholding tax
- Juristic Investor	- 10% witholding tax
Interest Income:
-Individual Investor	- 15% withholding tax
-Juristic Investor	- 15% withholding tax
2.  Income from investment in foreign investment funds registered in Thailand
Capital Gains:
- Individual Investor	- Tax free
- Juristic Investor	- 12.5% withholding tax for investment funds registered before December 27, 1991  - 15% withholding tax for investment funds registered since December 27, 1991
Dividends:
- Individual Investor	- 10% withholding tax
- Juristic Investor	- 10% withholding tax



Tax Treaties 
To encourage foreign investment, Thailand has double taxation agreements, as of August 14, 1995, with 27 contries. Through these tax treaties, some foreign institutional investors receive tax free privilege on capital gains. Investors from the following 27 contries will receive tax shelter according to the double tax trety provisons. 

Australia, Austria, Belgium, Canada, People's Republic of China, Czech Republic, Denmark, Finland, Frence, Federall Republic of Germany, Hungary, India, Indonesia, Italy, Japan, Republic of Korea, Malaysia, The Natherlands, Norway, Pakistan, The Philippines, Poland, Singapore, Sri Lanka, Sweden, United Kingdom & Northern Ireland, Vietnam. 
Stamp-Duty 
Both foreign and domicile transferrers of share certificates and debenture certificates must pay for stamps to be affixed on the certificates according to the value of the paid-up shares or the values of the transferred instruments whichever is greater. The stamp rate is 1 Baht (4 U.S. cents) for every 1,000 Baht (US$40) or fraction thereof except for : 
1. Transfers of registerd securities having the SET as registrar; 
2. Transfers of government bonds, state enterprise bonds and unit trusts. 

***This page is maintained by the Office of Economic and Financial Affairs, Washington, DC who can be reached at econ-fin@ari.net.  ***  

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