The draft is currently under the consideration of a committee of the National Legislative Assembly.

According to the amended draft, a committee on capital-market surveillance will be set up and given the authority of a regulator in place of the Securities and Exchange Commission (SEC). In addition, the new committee would also have more authority than the Stock Exchange of Thailand's board of directors.

The new committee, if set up, would introduce regulations and supervise their implementation - the current role of the SEC's board of directors. The SEC would, if the amended act is implemented, have less authority and be in charge only of policy management.

The proposal for a new committee has triggered wide criticism among market players.

Kampanart Lohacharoenvanich, president of the Association of Securities Companies and director of the SET, said it was quite strange that the new committee would have an absolute mandate, while the current SEC has less authority.

The overall mandate of the committee on capital-market surveillance will include supervision of both the SEC and the SET. Thus, the SET's board of directors would have diminished authority.

"In the long term, the amendment of the act will change the SET's role from regulator to operator, while the new committee would become the regulator. Finally, the SET would become a self-regulated organisation and then privatised before listing on the stock market. The situation would evolve in this way as a result of the new committee," Kampanart said.

He added that the entire new structure of the authorities for the capital market was well-intentioned and paves the way for financial liberalisation. But he expressed concern that the absolute mandate of the new committee could become a double-edged sword.

Wichai Poolvoraluk, president of the Thai Investors Association, said the new committee, if set up, would create a management structure similar to a CEO in a corporation which is in fact a good structure for private business.

However, if such a structure were implemented with a regulator, there would be questions about the absolute mandate of such a committee.

The nine members of the committee on capital-market surveillance would be selected by the SEC's board of directors, but there would be questions about the selection process, he said. Thus, the SEC should conduct hearings before it implements this structure.

Suthichai Chitvanich, executive vice president of the SET, believes that the new structure will make overall supervision clearer.

With various types of products and a higher number of investors, investors expect the authorities to have a more transparent supervision mechanism, he said.

Siriporn Chanjindamanee

The Nation