Sec Plans New Channel For Thais To Invest Offshore

[george]

SEC plans new channel for Thais to invest offshore

BANGKOK: -- Securities and Exchange Commission is considering plans to open more channels for local investors to invest in offshore securities, SEC head Thirachai Phuvanatnaranubala said Friday.

The move is intended to prepare for future trends toward financial liberalisation as well as to help curb upward pressure on the baht.

The SEC will soon allow brokerage firms to use part of their trading portfolio to invest in offshore securities, said Thirachai.

The commission intends to gradually allow individual investors to make portfolio investments offshore, but it may not happen soon because the Bank of Thailand is concerned that it could adversely affect the central bank's ability to control capital flows.

"We are studying all the possibilities and will discuss with the central bank to seek appropriate solutions that could limit volatility of capital flows," Thirachai said.

As another potential alternative, the SEC may allow brokers, or asset management companies to set up funds of a certain size to buy certain securities in overseas markets and list them as depository receipts in the Thai stock market. The capital outflows would occur only at the time the securities were purchased, as the trading of depository receipts would be conducted through the local bourse and would not affect capital flows.

"This is like a dual listing that is done, not by the company itself, but by local institutions. It will allow local investors to trade in world-class stocks. In some markets, these type of DRs make up of around 20-30% of trading volume," Thirachai said.

--The Nation 2006-12-01