The Association of Securities Companies (Asco) has issued a set of guidelines for brokerage houses in giving stock-trading credit lines to new customers.

President Chongrak Rarueysong said one of the main provisions was that brokers could provide credit lines up to three times the value of qualified assets held by each retail investor. The qualified assets include bank deposit accounts; promissory notes and securities issued by listed companies; bonds issued by commercial banks and finance companies; and unit trusts.

However, retail investors have another option: they can obtain credit lines equalling the value of their salary over 12 months if they offer a salary statement as proof.

Credit lines for institutional investors and entrepreneurs must not exceed the value of their company shareholding, calculated proportionately in accordance with the latest audited financial statement of their companies. For instance, if company A owns 25 per cent of company B, which has a 2006 audited net profit of Bt100 million, then company A will be allowed a maximum credit line of Bt25 million.

The guidelines, which took effect last Thursday, will standardise credit lines offered by all brokers. Before now, credit lines had been a matter of decision by individual brokers.

Chongrak said the new guidelines took into consideration the potential of stock investors and their debt-repayment ability. However, brokers who are concerned about preventing default and late stock delivery can tighten the credit lines of investors who display speculative behaviour and buy stocks with high volatility.

Credit-line guidelines for speculative stock players have not yet been revealed or implemented. Chongrak said all related parties considered it inappropriate to implement such guidelines amid the current sluggish market conditions.

However, Asco, the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission are considering a maximum credit line for speculative stock investors, and it will be enforced immediately if favourable conditions return to the market, he said.

Meanwhile, DBS Vickers Securities CEO Pattera Dilokrungthirapop, speaking on behalf of the chairman of the Derivative Traders' Club, said the SET 50 Index Future commission fee, which went into effect last Thursday, was based on a sliding scale.

Individual investors trading one to five contracts will be charged Bt400 per contract plus a Bt50 fee, those trading six to 20 contracts will be charged Bt300 per contract plus a Bt50 fee, and those trading more than 21 contracts will be charged Bt200 per contract plus a Bt50 fee.

Institutional investors are subject to a charge of Bt200 per contract plus a Bt50 fee regardless of the number of contracts.

She expressed confidence that the average daily trading volume of derivatives would rise to 6,000 contracts by year's end, from only 1,200 last year.

The SET Index Option, set to debut in the market in the third quarter, will give a big boost to the market's trading volume, she said.

The fee for the SET Index Option is still being considered by derivatives brokers. 

Siriporn Chanjindamanee

The Nation