Two presidents of the Stock Exchange of Thailand (SET), the incumbent Patareeya Benjapholchai and former president Kittiratt na Ranong, have spoken out against possible moves to demutualise the stock exchange.

Their comments came yesterday after reports that the demutualisation move is to be included in draft amendments to the SEC Act.

Surprisingly, almost none of the SET's top executives were aware of it. Demutualisation is a process akin to privatisation, which would allow the SET to raise funds from the finance market.

Patareeya said the SET's funds are sufficient, and it is not in need of new capital. At the end of 2006, the stock exchange's funds amounted to Bt10 billion. It is unnecessary to apply cross-holding measures to the Thai stock market, she said, and if the reports are to be believed, the SET will have to consider the reasons why the Securities and Exchange Commission (SEC)'s board of directors has given its approval for the SET to undergo demutualisation.

"The SET once conducted a study of corporatisation, but it was suspended because the SET is able to operate without a capital increase. Moreover, demutualisation would allow private sector interests to hold stakes in the SET and its goals might be changed," she said.

Kittiratt, who is a member of the SEC board, said he disagrees with demutualisation because the SET does not need fresh capital.

"In my personal view, I disagree with the SET's demutualisation. If this issue is raised in a meeting of the SEC's board of directors, I will listen to the reasons, but I'm ready to object to it," he said.

A source in the broker community said reports of the SET's demutualisation surprised him because stock exchange executives are unaware of the plan. Such a move is an important issue and related agencies should proceed with it transparently because of its impact on brokerage houses.

Meanwhile, the Securities and Exchange Commission (SEC) rushed to dismiss reports that the SET's demutualisation is to be written into draft amendments to the SEC Act.

Topics in the draft include restructuring of the SEC board of directors, corporate governance of listed companies, protection of retail investors' rights and debt instrument market development. There are no proposed provisions involved the SET's demutualisation, it said.

Regarding the inclusion of the corporate governance issue in the draft amendments, the SEC said it regarded it as essential because the Public Act BE 2535 is insufficient to protect all parties relevant to the raising of funds in the capital market.

Siriporn Chanjindamanee

The Nation