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Published on February 29, 2008

"The Association of Securities Companies argued that the higher collateral requirement can help lower risk to increase trading stability in the overall system," Suthichai Chitvanich, executive vice president of the Stock Exchange of Thailand, said yesterday.

The SET's board of governors has approved the measure, he said, adding that it also resolved to widen the types of collateral.

The assets that could be put up as collateral must have high liquidity and low risk, he said without specifying what would be new types. The Securities and Exchange Commission allows brokerages to accept cash, listed securities, treasury bills, government bonds, debentures, promissory notes, certificates of deposit and letters of guarantee as collateral.

An analyst at Sicco Securities said he was concerned that the new requirement would gradually drive more retail investors out of the market after some disappeared following enforcement of the 10-per cent collateral rule in October 2006.

Siriporn Chanjindamanee

The Nation