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Thai Stock Exchange to Implement Short Selling Restrictions
The Securities and Exchange Commission (SEC) in Thailand is requesting the Stock Exchange of Thailand (SET) to implement stricter pricing rules for short selling.
- The Securities and Exchange Commission (SEC) is urging the Stock Exchange of Thailand (SET) to implement pricing rules for short selling and examine the SET’s naked short selling system.
- The SEC is requiring brokers to identify the ultimate beneficiaries of short selling transactions by asking custodians to disclose the names of investors who borrow stocks.
- The SET may reimpose the “uptick” rule, requiring short sales to take place at a higher price than the stock’s last trading price if it is down 10% or more, to address concerns about naked short selling.
The SEC will also examine the SET’s naked short selling system. Additionally, the SEC has asked the SET to require brokers to disclose the names of investors who borrow stocks for short selling transactions.
The SEC is investigating naked short selling and has asked the SET to reintroduce the “uptick” rule, which requires short sales to be made at a higher price than the stock’s last trading price if the stock is down 10% or more.
The SET will review and propose any additional measures to the SEC if needed. The SEC has been inspecting the SET’s operations and will take action against any wrongdoing. They have also set criteria and inspected securities firms to ensure compliance with short selling regulations.
Short selling is a mechanism that contributes to market efficiency and plays a role in the price discovery process. In order to engage in a short selling transaction, an investor must borrow shares from a securities company to ensure the prevention of failed trades. Subsequently, the investor is required to repurchase and return those securities to the securities company. However, it is important to note that short selling transactions can have potential negative impacts on market conditions and investor confidence.
The SEC recognizes the significance of addressing the issue of short selling, as it has the potential to erode confidence in the capital market. In order to address this concern, the SEC has been conducting regular and comprehensive reviews of relevant operations, working closely with all stakeholders involved.
This includes a focus on transactions with high risks and potential incentives for naked short selling, which can undermine market confidence. Additionally, the SEC is closely monitoring program trading or algorithmic trading, as the current high trading volumes are largely driven by low transaction costs and the potential for profits in narrow price ranges.
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