SET-SEC jointly find a way to disclose information on private placement of shares to be issued as a law, closing the gap of investor risk if shares are forced to sell.
Mr. Rongrak Panaphawuttikul, Deputy Managing Director of the Stock Exchange of Thailand (SET) and Spokesperson of the Stock Exchange of Thailand, said that using securities as collateral to repay loans involves two types of transactions.
The first type is the delivery of securities to the lender to hold as collateral. This type has not yet been transferred. The lender is still listed as the holder of the securities. There are 2 types: borrowing from a securities company to buy securities in the stock market (Margin Loan) and borrowing or requesting a credit line from a credit provider (Lender) or pawning shares, which includes recording collateral information through a member, Thailand Securities Depository Co., Ltd. (TSD), such as a securities company, and not recording collateral information in the TSD system. The lender can be either a do
mestic or foreign custodian.
The second type is the transfer/sale of securities to the lender, which is a complete transfer with a change in the name of the securities holder. However, in some cases, it may be a complete transfer with conditions for repurchase.
Currently, there are more forms of using shares as collateral than in the past, such as Margin Loan, stock pledging where TSD has recorded data on the use of securities as collateral, which is called being in the system. As for other forms where shares are used as collateral but are not registered with TSD or the Securities Exchange, it can be called using shares as collateral outside the system, which means that the Stock Exchange does not have information.
The Stock Exchange of Thailand and the Securities and Exchange Commission (SEC) have discussed to provide investors with more information in this area to support their investment decisions. In the past, there have been cases where shareholders who used their shares as collateral outside the syst
em breached contracts when the share price continuously dropped, causing the price of the shares used as collateral outside the system to be forced to sell, resulting in damages to investors and investment risks.
Mr. Anek Yoo-yuen, Deputy Secretary-General of the SEC and spokesman of the SEC, said that the main principle is when the information of securities that are used as collateral is not in the system, how can investors be informed quickly to use in making decisions? For the process leading to the issuance of regulations, there must be detailed discussions on when and how to report. Because the issuance of the SEC regulations will affect investors widely, there must be a process to open up to listen to the opinions of stakeholders. Then enter the enforcement process. However, the process will be expedited as soon as possible. It is expected that the principles will be seen within this year.
In addition, it is necessary to create awareness among major shareholders of the company and the company’s execut
ives to understand the process of using shares as collateral, that the credibility of the contracting parties and the terms of the contract should be taken into account to prevent possible damages or disputes.
Source: Thai News Agency