The company plans to form a team to advance the proposal to the Stock Exchange of Thailand.

TMBAM has usually managed mutual funds with a passive style, according to Jotika Savanananda, managing director. She and her team are looking forward to joining this competition.

According to the Association of Investment Management Companies, as of September 8, TMBAM ranked sixth of the 18 asset-management firms in the industry but it is the biggest player in terms of asset size in funds that track the SET50 Index. Currently, there are six asset-management companies that have launched SET50 index funds.

ETFs are open-ended funds that track specific indices and can be traded like securities.

They will be listed on the SET but the investment risk will be diversified similarly to a general index fund. Thailand's ETF, expected to be launched within the second quarter of next year, will mainly involve five parties, comprised of the SET, a fund manager, a trustee, index vendor and participating dealers.

At the early stage, an asset-management company will join forces with a securities firm (which will act as a participating dealer), to set up an ETF.

Only the PD can create or redeem the unit trust. The tracked stocks selected to create this ETF will be weighed by the proportion analysed by the fund manager.

The price of ETFs will be relayed in real time like stocks. Investors will trade them via brokerage firms.

ETFs will be created to increase liquidity to the stock market, expand the investor base and encourage the market to use more innovative financial tools, according to Sethaput Suthiwart-Narueput, SET senior vice president.

"Most of the popular trading products available in the market now are the index-linked products," he said. "Because few companies list on the exchange, ETFs can be one way to increase liquidity in the market. Also, it can help asset-management companies expand their investment portfolios. Securities firms will also have more revenue from trading commissions and arbitrage transactions."

Piyarat Setthasiriphaiboon

The Nation