1 TSD’s SBL Service The 8 th ACG Cross Training Seminar June 28, 2006 Busaba Kongpanyakul Business...

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TSD’s SBL TSD’s SBL

Service Service

The 8The 8thth ACG Cross Training ACG Cross Training

SeminarSeminar

June 28, 2006June 28, 2006

Busaba KongpanyakulBusaba Kongpanyakul

Business Development DepartmentBusiness Development Department

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OutlineOutline

Background of SBL in Thailand

Roles of TSD

Structure of TSD’s SBL Service

Service Scope

Taxes

Future Outlook

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BackgroundBackground

Year 1999

TSD assumed the role of the lender of last resort to

prevent defaults in securities trading

Some securities companies obtained SBL license from SEC

Current market situation

Small volume of SBL transactions

Lack of supply

Few SBL licensees

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Roles of TSDRoles of TSD

Lender of last resort

Develop SBL Master Agreement

Service Utility for SBL intermediaries

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PHASE 1PHASE 1

LenderLender(TSD (TSD

Member)Member)


Member)Member)


Member)Member)


Member)Member)

BorrowerBorrower(TSD (TSD

Member)Member)


Member)Member)BorrowerBorrower

(TSD (TSD Member)Member)


Member)Member)

TSDTSD(Intermediary (Intermediary

Agent)Agent)

TSDTSD(Intermediary (Intermediary

Agent)Agent)

PrincipalPrincipal(TSD Member)(TSD Member)


AgentAgent(TSD Member)(TSD Member)


PHASE 2PHASE 2

Structure of TSD’s SBL ServiceStructure of TSD’s SBL Service

Lender Lender (Client)(Client)Lender Lender (Client)(Client)


Borrower Borrower (Client)(Client)














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Service Scope: Phase 1Service Scope: Phase 1

LenderLender BorrowerBorrowerTRANSACTIONTRANSACTION

TSD’s SBLTSD’s SBLServiceService

MatchingMatching

ConfirmationConfirmation

Corporate ActionsCorporate Actions

ReportsReports

Collateral Mgt.Collateral Mgt.

Clearing & SettlementClearing & Settlement

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ParticipationParticipation

Qualified participants: TSD’s depository members

Apply for participation in SBL and receive an

authorization from TSD

Comply with TSD’s rules and regulations of SBL

transactions

Open SBL account and SBL collateral account

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Types of TSD’s SBL Types of TSD’s SBL TransactionsTransactions

Settlement-Coverage Transactions

To prevent any default during the clearing and

settlement process

Clearing House is the only borrower and acts as a

principal

Put Through Transactions

TSD acts as an intermediary agent

All trade conditions are pre-negotiated between the

borrower and the lender

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Eligible SecuritiesEligible Securities

Scripless form of the securities deposited at TSD

Except:

All kinds of warrants

Suspended stocks, posted “SP”

Stocks posted “C” (Compliance)

Debenture bonds

Thai Trust Funds

NVDR, DR

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Eligible CollateralEligible Collateral

Baht-denominated cash

Government bonds

Listed stocks in the SET

Letter of Guarantee

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Collateral ManagementCollateral Management

Daily mark to market

Stocks: Last closing price announced by the SET

Bonds: Reference price announced by Thai BMA or BOT

Set haircut rates for each type of collateral

Handle margin calls

Eligible margin: baht-denominated cash only

Margin is kept and managed by TSD

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Corporate ActionsCorporate Actions

It needs to be paid to the original owner in full It needs to be paid to the original owner in full amount on the payment date.amount on the payment date.It needs to be paid to the original owner in full It needs to be paid to the original owner in full amount on the payment date.amount on the payment date.

The original owner must recall or request for The original owner must recall or request for collateral substitution at least 4 days before the collateral substitution at least 4 days before the record date. record date.

The original owner must recall or request for The original owner must recall or request for collateral substitution at least 4 days before the collateral substitution at least 4 days before the record date. record date.

Cash/Stock DividendCash/Stock Dividend

Rights IssueRights Issue

Voting RightsVoting Rights

1.1. The original owner indicates the The original owner indicates the intention to subscribe and pays intention to subscribe and pays subscription money to the other party subscription money to the other party at least 1 day before the deadline. at least 1 day before the deadline.

2.2. The other party has to subscribe and The other party has to subscribe and deliver the securities to the original deliver the securities to the original owner by the listing date.owner by the listing date.

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TaxesTaxes

Exempt taxes as follows:

Tax on income from transfer of loaned and

collateral securities

Withholding tax on manufactured

dividend/interest (for Thai or foreign juristic

persons in Thailand)

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Future OutlookFuture Outlook

SBL transactions is expected to increase due

to:

Development of derivatives market

Encouragement of regulators:

• SEC decreases license fee from THB 100,000 to

20,000 and waives annual fee

• Securities firms are allowed sell short

• SEC plans to allow mutual & private funds to sell short

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Thank You Thank You

Busaba Kongpanyakul

[email protected]

1 TSD’s SBL Service The 8 th ACG Cross Training Seminar June 28, 2006 Busaba Kongpanyakul Business...

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