SET, SEC adapting to tech disruption

Economy November 13, 2018 01:00


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THE STOCK Exchange of Thailand (SET) and the Securities Exchange Commission (SEC) are bracing for technological disruptions by reforming their business structure and developing legislation to support tech start-ups.

In the coming years, the SET will adapt its business structure to transform to a partnership platform format that drives “inclusive growth” for new tech startups, president Pakorn Peetathawatchai told a seminar on “Creating New Frontier of Capital Markets” last Friday. 

The SET will introduce new projects and platforms to support tech startups such as Launchpad and Investment Vehicle for Enterprises (Live). The latter is a platform to bring together startups, investors and sponsors and was launched earlier this year under “Live Fin Corp”, a subsidiary company of SET. 

In this platform, startups seeking investment capital can meet with investors willing to contribute to crowdfunding startup businesses. The platform also aims to create an investor community so that retail investors are informed about various startup businesses as well as the opportunities and risks of investing in them, says Pongpiti Ektheinchai, managing director of Live Fin Corp. 

The number of Thai startups funded through active angel investments, venture capital, and corporate venture capital has been increasing rapidly in recent years. In 2012, only three funded startups in Thailand were officially recognised by Techsauce. This increased to 50 in 2015, 75 in 2016 and 90 in 2017, according to the Thailand Tech Startup Ecosystem Report Q2/2018 from Techsauce. 

“We expect to see at least 100 funded startups in 2018,” says Pongpiti. 

Meanwhile, the SEC faces various legislative challenges as the market landscape shifts due to the introduction of technological disrupters. 

Many in Thailand’s ageing population are seeking to invest in affordable real-estate assets in order to secure a stable source of income as they go into retirement. 

As well, the tokenisation of assets is a growing global trend that is now emerging in the Thai market, allowing middle-income investors to invest in a fraction of an otherwise unaffordable asset and become a “fractional owner” of the asset, says Achari Suppiroj, director of the fintech division of the SEC. 

For example, instead of purchasing a whole building, investors can purchase tokens that represent a fraction of the asset, she says. 

However, there are still legislative obstacles obstructing the advancement of asset tokenisation in Thailand. 

For example, it is still legally ambiguous as to whether an asset token falls under the legal regulations of a property asset or that of a digital asset, she explains. 

Achari also expressed her concern over Thailand’s regulation of initial coin offerings (ICOs). ICOs are a fundraising method for cryptocurrency companies similar to initial public offerings (IPOs). However, they have been used by cryptocurrency companies to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.

By passing regulatory laws on ICOs, Achari sees a risk that Thai cryptocurrency startups may be discouraged and choose to instead launch ICOs in other countries. 

This may in turn hinder the development of a digital ecosystem within Thailand’s economy. The challenge for the SEC is to strike a balance in its regulatory framework so that cryptocurrency startups are not discouraged and investors also feel safe investing in ICOs, she said.