Thailand Plans to Ease Structured Note Rules

[Jacob Maslow]

Thailand plans on easing structured note rules to open the market to bigger foreign players. Currency control regulations will also be eased.

In an attempt to capitalize on the growth in the greater Mekong subregion, Thailand’s securities regulator announced plans to relax structured note issuance rules. By the second quarter, structured notes should be able to be linked to equity of underlying assets as well as individual companies outside of the country. Sales of equity-linked notes overseas would also be expanded to include retail investors.

The move to relax structured note rules is a part of a much larger push by Thai regulators to expand the appeal of debt offerings and to implement practical regulations. Thailand is the second-largest economy in Southeast Asia and hopes to establish itself as a capital markets hub for the Mekong subregion.

Currently, Thailand’s structured notes rules require foreign equity-linked notes to be tied to groups of stocks or indexes. Notes can only be sold to high net worth individuals or institutional investors.

The new SEC regulations would increase demand for structured notes, but there will be limitations. Transactions are currently settled in Thai baht, but the majority of foreign investors prefer settlements in U.S. dollars. Additionally, the Bank of Thailand must give permission if the notes are linked to currencies or gold.

To help tackle these obstacles, the SEC plans on revising regulations with regards to foreign issuers. The revised regulations would be in line with international standards and would include investor protection measures.

Within the next two or three years, the Bank of Thailand also plans to relax its currency control regulations. This would allow individuals to invest in overseas securities rather than through private fund or Thai brokerages.

Easing structured note rules would open the market up to bigger foreign players. As growth in the greater Mekong subregion continues, Thailand hopes to capitalize on this opportunity to establish itself as a capital markets hub.

-- 2015-02-07

[rickirs]

"Transactions are currently settled in Thai baht"

Didn't the Junta last year include in a number of MOU's with China agree to accept its yuan in Thai market trades? So if other countries want USD's, Thailand will be awashed in yuans that only the Chinese will accept in trade.

[Briggsy]

I am ignorant here. Is a "structured note" something that would be known as a "corporate bond" or "debenture" in the UK.