With Kesara Manchusree, President of the Stock Exchange of Thailand.
Bringing markets together onto one platform
The Stock Exchange of Thailand recently changed our trading platform for the equities and derivatives markets. We changed equities two years ago, and we brought derivatives onto the same platform this year. This is a reflection of the cash equity market size and our desire to unite across our platforms. We were using an in-house platform, but we decided to buy the new system because we believe that technology has become more developed and we need to be at the forefront of that. The new system, called SET CONNECT, supports a higher throughput and has lower latency together with greater functionality to support new products and new connectivity. It also includes another API set that we are going to offer to clients.
We have been working closely with our market participants during this period of change and their reaction has been positive. We have about 40 market participants and we have been working with them for almost two years around this implementation. Market participants in Thailand mostly use the local ISP but after we introduced the new system, we found out that they are increasingly using international ISPs to come into Thailand. So thanks to the new platform we are seeing new names enter Thailand and their feedback has been very good.
Around the region many other markets have been very busy, because a lot of exchanges have been changing their trading platforms. We have been working very closely with both the local and the regional brokerage houses to keep track of their technology updates and to ensure that we are aligned with their needs and the changes happening region-wide.
The effects of Shanghai-Hong Kong Connect
We have been listening to the plans for the Connect between Shanghai and Hong Kong with interest and I have personally visited both Shanghai and Hong Kong recently. There are clear benefits for both exchanges, but I think the real positive consequences will be for brokers in Hong Kong to access the Chinese market very easily. In term of the effect on the Thai market and other regional exchanges: I think that they are at the beginning of a long journey. While we will keep watching what happens with interest, there is little real interest from the Thai market to invest in the Chinese market. There are however definite opportunities to extend our market into China and for China to extend their investment into Thailand.
The Thai market has been doing a lot of marketing to Chinese investors, with returns this year so far on the index of 21%. Listed companies in Thailand are very attractive in terms of our returns.
Each regional market uses different systems and has different characteristics. In term of the connectivity, in terms of technology, everyone has their own API that can connect to each other. As long as we can connect to each other, trading will happen and there is every possibility to build on this connectivity. But there are many complications when you have to take into account the different rules and regulatory jurisdictions throughout the region. We are looking to develop our relationships between the Thai market and other regional markets along the lines of the ASEAN link we currently have between Malaysia, Singapore and Thailand.
This cooperation will keep growing because every exchange is working on expanding their market. For example, the Thai market is working with Deutsche Bourse on the cross trading of derivative products.
What we do need to ensure is that we have proper monitoring technology to manage these growing markets. We just bought a new surveillance system, called SET WATCH and now we have our own in-house surveillance. This also means that we are working on defining all our data to standardise. Our regulator is also involved and has their own monitoring system, so there are definitely developments in this area throughout Thailand and more to come.