I'm considering purchasing silver futures (SVF) on TFEX, but I am confused as to the size of 1 contract. The TFEX website describes it as follows:

 

https://www.tfex.co.th/en/products/precious-metal/silver-online-futures/contract-specification

Contract Size:    1 contract = 3,000 multiplier of the reference price per troy ounce

 

The reference price is quoted in USD, so does this mean the minimum contract size is 3000 oz?  That's almost 5 million baht. That seems like an extraordinary large size for a contract. Even in the West contracts are usually no larger than 1000 oz.  It's an odd way of phrasing something. Why not just say it's 3000 oz? All of this leads me to believe there is some subtlety here that I don't understand.

 

Has anyone invested in SVF on the TFEX, and can you help me understand what the real contract size is?

Yep ! The way it is phrased, 1 contract equals 3000 Oz. Look at other trading platforms. For example oanda.com. There you can buy Silver per 1 Oz or a multiple of it. Can buy 1 Oz or 10thousand or more. Up to you.

Here is something that I wrote on AN in a different forum:

 

"Especially looking at Gold/Silver we have entered a stage that is called a "feeding frenzy". A day when Gold/Silver hasn't increased in price by less than 1 to 2 % is considered as a "dissappointing day". Irrational one might think".

 

In other words: Keep in mind that Gold and especially Silver had a tremendeous Bull Run. I hate to see you buying into a "top".

For those of you interested, let me answer my own question and explain how the SVF futures actually work. I've actually played around with this over the past few days. I think this is relevant right now because of how much activity and interest there is currently around precious metals in the market.

 

It turns out, it isn't possible to get direct, simple exposure to silver on TFEX. These SVF derivatives are actually a combination of taking a long position on silver and a simultaneous short position the USD. What one contract of SVF gets you is exposure to this mixed basket of securities equivalent to Thai Baht in the amount of the numerical value of the USD price in silver x 3000. The actual USD exchange rate is completely ignored in this calculation (i.e. it is fixed at 1). This is the origin of the short position against the USD.

 

Let's take an example. You buy one contract of SVF on the TFEX when the silver price is $50 USD and the exchange rate is 32.4. Your contract size is 150,000 Thai Baht (50 x 3000), or about 92.6 oz. of silver. Now, if the exchange rate between THB and USD doesn't move over the life of the contract, then your contract will exactly track the value of that 92.6 oz. just like you'd expect.  (Note: the actual size in oz. of your SVF silver contract will vary depending on the THB/USD exchange rate on your day of purchase.)

 

Now however, let's assume that the value of THB strengthens against the USD to 31 while we hold the price of silver constant on the international market. If you had just held silver instead of this funky SVF derivative, those silver ounces would be worth less in THB terms. But instead your 150,000 THB SVF contract is now actually equivalent to 96.8 oz of silver. You came out ahead in this situation because of the SVF contract's inherent short position on the USD.  Similarly, if the THB were instead to weaken to 35, your contract would only be equivalent to 85.7 oz. Here, you would see the price of silver rise in the Thai market, but despite the rising price of silver in Thailand you'd still be losing due to the TFEX SVF contract's USD short position.

 

The only way to get a position on TFEX that tracks the price of silver in THB terms is to simultaneously buy an offsetting long position on the USD. Since these SVF contracts are about $5000 at the current silver price of ~$54 along with an exchange rate of 32.7, and with the TFEX USD currency contracts in $1000 increments, you'd need to buy about 5 offsetting USD long contracts to mitigate the inherent $5000 short in the SVF.

 

Some will ask why not just purchase a simple silver futures contract on an overseas exchange and not have to deal with all this complexity. Unfortunately, overseas exchanges are not exempt from individual capital gains tax in Thailand the way securities on Thai exchanges are.  And with the Thai tax authorities clamping down on all things tax related, it's better to keep things on Thai exchanges whenever possible.

 

I hope the above makes it clear for anyone else considering jumping into this.

 

(Note: if you would prefer to take a short position on SVF because you think silver is at a peak, then just invert everything I said above. The exact same rules apply to shorting SVF just in the reverse.)

13 hours ago, uncletiger said:

Unfortunately, overseas exchanges are not exempt from individual capital gains tax in Thailand the way securities on Thai exchanges are.

 

True.  However, capital gains are (currently) only taxable if you bring them into Thailand in the same year are they are made.  I'd still be inclined to go with an overseas exchange.

 

https://taxsummaries.pwc.com/thailand/individual/income-determination#:~:text=Capital gains and investment income earned by a resident from sources outside Thailand are not taxable unless remitted to Thailand in the year of receipt.

On 10/17/2025 at 1:56 PM, uncletiger said:

For those of you interested, let me answer my own question and explain how the SVF futures actually work. I've actually played around with this over the past few days. I think this is relevant right now because of how much activity and interest there is currently around precious metals in the market.

 

It turns out, it isn't possible to get direct, simple exposure to silver on TFEX. These SVF derivatives are actually a combination of taking a long position on silver and a simultaneous short position the USD. What one contract of SVF gets you is exposure to this mixed basket of securities equivalent to Thai Baht in the amount of the numerical value of the USD price in silver x 3000. The actual USD exchange rate is completely ignored in this calculation (i.e. it is fixed at 1). This is the origin of the short position against the USD.

 

Let's take an example. You buy one contract of SVF on the TFEX when the silver price is $50 USD and the exchange rate is 32.4. Your contract size is 150,000 Thai Baht (50 x 3000), or about 92.6 oz. of silver. Now, if the exchange rate between THB and USD doesn't move over the life of the contract, then your contract will exactly track the value of that 92.6 oz. just like you'd expect.  (Note: the actual size in oz. of your SVF silver contract will vary depending on the THB/USD exchange rate on your day of purchase.)

 

Now however, let's assume that the value of THB strengthens against the USD to 31 while we hold the price of silver constant on the international market. If you had just held silver instead of this funky SVF derivative, those silver ounces would be worth less in THB terms. But instead your 150,000 THB SVF contract is now actually equivalent to 96.8 oz of silver. You came out ahead in this situation because of the SVF contract's inherent short position on the USD.  Similarly, if the THB were instead to weaken to 35, your contract would only be equivalent to 85.7 oz. Here, you would see the price of silver rise in the Thai market, but despite the rising price of silver in Thailand you'd still be losing due to the TFEX SVF contract's USD short position.

 

The only way to get a position on TFEX that tracks the price of silver in THB terms is to simultaneously buy an offsetting long position on the USD. Since these SVF contracts are about $5000 at the current silver price of ~$54 along with an exchange rate of 32.7, and with the TFEX USD currency contracts in $1000 increments, you'd need to buy about 5 offsetting USD long contracts to mitigate the inherent $5000 short in the SVF.

 

Some will ask why not just purchase a simple silver futures contract on an overseas exchange and not have to deal with all this complexity. Unfortunately, overseas exchanges are not exempt from individual capital gains tax in Thailand the way securities on Thai exchanges are.  And with the Thai tax authorities clamping down on all things tax related, it's better to keep things on Thai exchanges whenever possible.

 

I hope the above makes it clear for anyone else considering jumping into this.

 

(Note: if you would prefer to take a short position on SVF because you think silver is at a peak, then just invert everything I said above. The exact same rules apply to shorting SVF just in the reverse.)

OK, tax considerations are of importance to you. Fine, no problem.

 

Still the product you descibe is very complex. Some questions arise: Market liquidity (bid/ask spread)? Carrying charges? 

Since futures are involved, carrying charges will apply.

 

Just as a example: A long position in Silver/USD the carrying charge is currently around 6% per year. To "hedge" the USD against the Swiss Franc (for example) costs around 5.5% per year. How much a USD/Thai BHT hedge currently costs, I will post here tomorrow.

 

This is to say, that long term investing, every time in connection with any sort of "futures", carrying charges DO matter. 

22 hours ago, swissie said:

OK, tax considerations are of importance to you. Fine, no problem.

 

Still the product you descibe is very complex. Some questions arise: Market liquidity (bid/ask spread)? Carrying charges? 

Since futures are involved, carrying charges will apply.

 

Just as a example: A long position in Silver/USD the carrying charge is currently around 6% per year. To "hedge" the USD against the Swiss Franc (for example) costs around 5.5% per year. How much a USD/Thai BHT hedge currently costs, I will post here tomorrow.

 

This is to say, that long term investing, every time in connection with any sort of "futures", carrying charges DO matter. 

To "hedge" the Thai Bht against a declining USD currently costs around 9% per year.