Thailand’s Stock Exchange will impose stricter regulations on short selling and high-frequency trading in an effort to stabilize the market and restore investor confidence. These changes will limit short selling and high-speed trades to stocks within the SET100 Index, the country’s main stock index, as announced by Asadej Kongsiri, president of the Stock Exchange of Thailand (SET), during a press briefing on Wednesday. Currently, short selling is allowed on SET100 stocks and other securities, but there are no limits on high-frequency trading.
This move is part of the Thai regulators’ broader strategy to regain the trust of investors amid a prolonged downturn. Over the past two years, foreign investors have pulled nearly $10 billion from Thailand’s equity market, which has struggled with weak earnings reports from listed companies and a sluggish economic outlook. The SET Index has fallen roughly 10% this year, making it the worst-performing major equity market globally, and dropped as much as 0.8% on Thursday.
“We hope that the stricter rules will lessen any excessive swings in share prices,” Asadej said. “This will stabilize the market and revive investor confidence.”
The changes will also revise the uptick rule for short selling, applying it only to stocks whose prices have fallen below a specified threshold. Currently, the rule requires all short-selling transactions to be conducted at a price higher than the last bid.
However, some market analysts remain skeptical about the effectiveness of the new measures. Gancanapol van Compernolle, managing partner at RVC Emerging Asia Fund, argued that limiting short selling to the SET100 could be more about calming retail investor sentiment rather than addressing the root causes of market volatility. “I think this is a non-event,” he said.
In addition to tightening rules on short selling, the exchange had already mandated high-frequency traders to register before placing orders, as part of a wider effort to stabilize the market. These steps followed previous concerns over illegal short selling, program trading, and corporate scandals, including ongoing fraud investigations into companies such as Energy Absolute Pcl and Stark Corp.
Before implementing the new regulations, the SET will hold a public hearing and seek approval from the Securities and Exchange Commission (SEC). The new rules are expected to be enforced by the second quarter of 2025.
Since August 19, short-selling transactions on the Thai stock market have been valued at approximately 240 billion baht ($7.1 billion), or about 4% of total trading volume.
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