CEO of Tisco Securities Calls for HFT Industry Reform in Thailand

There may soon be a shakeup to Thailand’s high-frequency trading (HFT) industry, with brokerage firms asking regulators to supervise the sector, as it can cause large stock swings in the country.

According to a report from the Bangkok Post, an English-language daily newspaper published in Bangkok, Thailand, the chairman of the Federation of Thai Capital Market Organizations, Paiboon Nalinthrangkurn, said that stock regulators need to consider if HFT is an appropriate tool, due to the fact that it can sometimes distort the market.

In Thailand, retail investors make up 34-35 percent of the market. This represents a large drop from 60 percent five years ago, the news outlet said. However, whilst retail investors have decreased, the share of foreign investors, HFT and brokerage investment is up.

It’s time to be cautious

Commenting on the industry, Nalinthrangkurn said in the article: "In some countries such as the US, market regulators use a 'speed bump' tool to control HFT programmes to reduce market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term."

"The Thai stock market has frequently overreacted compared with others in the region, with a recent plunge of about 4% in a single day, which is too much and doesn't regularly happen in sustainable markets. It's time to be cautious about this kind of trading. We need good quality institutional investors rather than those causing high volatility."

Furthermore, Nalinthrangkurn, who is also the CEO of Tisco Securities, in addition to considering the future of the HFT sector in the country, he also wants the Finance Ministry to lower or waive the dividend tax, so that the number of long-term investors increase and therefore, tame the stock markets.

SET looking into it

According to the report, Sakkarin Ruamrangsri, the SEC deputy general, said the Stock Exchange of Thailand (SET) is looking into the HFT issue, and so far, its probes into the issue with the aid of artificial intelligence, have so far been positive.